The 2009 Commission on Taxation reviewed the One-Parent Family Tax Credit and acknowledged that it played a role in supporting and incentivising the labour market participation of single and widowed parents. However, in its recommendations, the Commission concluded that the credit should be retained but that it should be allocated to the principal carer of the child only. It is essential to review all tax reliefs, credits and incentives in order to ensure that they are properly targeted and if necessary re-focused in order that they could achieve the socio-economic objectives that are set for them. A feature of the One-Parent Family Tax Credit was that it could be claimed by multiple individuals in respect of the same child, resulting in an unsustainable position.
The One-Parent Family Tax Credit was replaced with the Single Person Child Carer Tax Credit from 1 January 2014. The restructured credit is of the same value i.e. €1,650 per annum as the one-parent family tax credit and it also carries the same entitlement to the additional €4,000 extended standard rate band, which increases that band to €36,800 per annum, before liability to higher rate of income tax arises. However, the credit is more strategically targeted, in that it will in the first instance only be available to the principal carer of the child.
The Single Person Child Carer Credit is available to you if you are the ‘primary claimant’. To be a primary claimant your qualifying child must live with you for the whole, or greater part, of the year (a period greater than 6 months). Ultimately, of course, the allocation of childcare responsibilities is primarily for parents or guardians to agree and a principal carer will be able to relinquish the credit in order than a non-principal carer can claim it.
Issues concerning the Single Parent Child Carer Credit are outlined in a review conducted by my Department in 2015, which is contained in the Report on Tax Expenditures, available at the following link: http://budget.gov.ie/Budgets/2016/Documents/Tax_Expenditures_Report_pub.pdf.
I am satisfied that the Single Parent Child Carer Credit in its current form is targeting limited State resources to where they are most needed. As such, I have no plans to reinstate a system such as the One Parent Family Tax Credit. While it is the case that policy choices exist as to how best to deploy the available financial resources of the State, resources are being prioritised at this time on initiatives to support those who are no longer in employment or who will or have had reduced income arising from the Covid-19 pandemic, as well as measures seeking to support employers in retaining staff on the payroll.