Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

The single person child carer tax credit will replace the one-parent family credit from 1 January 2014. It will operate differently from the one-parent family credit by being available in the first instance to the primary carer, namely, the individual who cares for the child for the greater part of the year. The one-parent family credit was available on the basis of the child residing with the claimant for part of the year, which led in certain cases to multiple claims in respect of the same child by different individuals. This policy change was recommended by the Commission on Taxation in its 2009 report.

I point out to Deputies no specific tax credit for children in the tax code is available to married or cohabitating couples to assist them with maintaining their children, therefore the existing one-parent family tax credit, and its availability to multiple claimants in respect of a single child, was unfair to such couples. This was accepted by many Deputies in the course of Committee and Report Stages. This change will ensure a maximum of one credit will be available but, as a result of a Committee Stage amendment brought forward by the Minister, it can now be relinquished by a primary carer to a secondary carer in certain circumstances.

The main features of the new credit include that the primary carer is the individual with whom the child resides for the greater part of the year. The primary carer can be the child’s parent or the individual in whose custody the child is and who maintains the child at his or her own expense for the greater part of the year. This claimant is entitled to the credit in respect of that child. If the primary carer relinquishes the credit, a secondary carer may claim it. The child must reside with this individual for more than 100 days in aggregate in the year, which is indicative of a level of involvement in the care of the child which is supportive of the primary carer. For the purpose of this limit a day can include the greater part of a day. Only one credit in respect of any child is available and an individual who is a primary carer for more than one child can get only one credit in respect of those children. Where the person who is the primary carer retains the credit, no other individual can get a credit for any of the children in respect of whom the person acts as primary carer.

The final point is that, regardless of whether a person is a primary or secondary claimant, he or she must not be married or in a civil partnership, unless he or she has separated, or cohabiting.

On Committee Stage Deputy Pearse Doherty inquired about students, particularly those from rural areas, who were obliged to live away from home between Monday and Friday of each week while attending college. He asked whether they could satisfy the requirement of residing with a primary carer for the purposes of being a qualified child. The Revenue Commissioners have indicated that there was previously a similar qualifying condition in respect of the one-parent family tax credit. There was never any issue of contention with regard to those students being treated as being resident with their parents, despite the fact that they were obliged to be absent from home in order to attend college. The same practical approach will be taken with this new credit.

The entitlement of the primary carer to the credit has precedence in all circumstances. If, however, the primary carer cannot utilise the credit, either the other parent or another person providing care for the child can make a claim for it. As a result, the credit applies in all circumstances. This will only be possible where the primary carer has relinquished his or her claim to the credit. The secondary carer, in claiming the credit, will also be required to confirm that the qualifying child resides with him or her for a period or periods of not less than 100 days during the year of assessment. How this period is determined will be a matter for the primary carer and the claimant to decide. In his amendment Deputy Richard Boyd Barrett is seeking a reduction in this period to 50 days. The shorter timeframe proposed by the Deputy could, in certain circumstances, lead to more than one secondary carer making a valid claim for a tax credit where a primary carer had relinquished it. In addition, the amendment would alternatively allow for the credit to be claimed where a secondary carer played a substantial role in the care and financial maintenance of a qualifying child. This alternative criterion would also allow for more than one secondary carer making a valid claim for the tax credit. It would be impossible for the Revenue Commissioners to adjudicate on to whom the credit should be awarded in such circumstances. On Committee Stage the Minister, Deputy Michael Noonan, pointed out that the definition of a day included the greater part of a day. This means that where a secondary carer takes a child on a Saturday morning and the child returns to the primary carer on Sunday afternoon or evening, this period will be actually treated as a period of two full days for the purposes of the legislation.

In designing this new credit aimed at the primary carer, with the opportunity for relinquishment to a secondary carer, the Minister was very anxious to address the situation which had prevailed with the one-parent family tax credit where any individual who had a child residing with him or her for just one day in the year could qualify for that credit. This could not be allowed to continue. On Committee Stage the Minister was asked if the credit could be made available to a secondary carer where there was no relinquishment, for example, in circumstances where there an acrimonious break-up. The officials have considered how this might operate, in consultation with officials from the Revenue Commissioners, and have concluded that in such circumstances it would not be possible to reallocate the credit without the permission of the primary carer. Such an allocation would effectively breach confidentiality in respect of the primary carer’s income and tax affairs.

Deputy Michael McGrath's amendment proposes that in order for a person to make a claim for the single person child carer credit as a secondary claimant and rather than requiring him or her to demonstrate that he or she was involved in the actual care of the child, he or she would have to have adhered to the terms of a court ordered maintenance agreement. While the amendment has some merit, it would not take account of situations where separated partners did not need to go to court and manage to agree maintenance arrangements in respect of the child or other care scenarios. It would not take account either, for example, of grandparents also involved in the care and maintenance of a child.

The intent behind the new credit is to provide a support for those single persons, whether they are primary or secondary carers, who have the additional responsibility of caring for a child while in employment. The credit is not granted simply on the basis that a claimant is obliged to provide financial maintenance for a child but rather where that adult is involved in the care of the child. Existing tax legislation does not provide tax relief for that element of a maintenance agreement which specifically relates to support for children. All parents have an equal responsibility to provide financial support for children. Married or cohabiting parents are not granted a tax credit in respect of their children when they must bear similar costs.

The Deputy further proposes that the unused amount of the tax credit could be apportioned to the secondary carer in circumstances where the primary carer did not fully utilise the credit. There are clear administrative difficulties in this proposal which would, at a minimum, require a review at the end of the tax year. However, the Minister would have significant concern about allowing for circumstances where the credit being claimed by one person was determined with reference to the tax and income position of another independent person. To allow for such a division of the credit would possibly expose Revenue to being obliged to indicate in some fashion the confidential details of another person’s financial circumstances.

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