Brian Hayes (Dublin South West, Fine Gael)

-----in that it received not only the support of both Houses but also the collective support of apolitical opinion far and wide across the Houses. The manner in which the legislation was progressed through the Houses marked a good day for the Oireachtas in dealing with an outstanding issue that had been left to one side for many years.

It is a convention which I support that tax law follows general law in the social sphere. In this case, the Bill simply transposes into tax law the provisions of the civil partnership Act. It sets out the various rights, entitlements and obligations that will apply to the taxation treatment of civil partners and cohabitants.

The Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 was historic because it facilitated the recognition of same sex relationships for the first time though a scheme that allowed the parties to declare their allegiance to each other formally and to register their partnership which would be recognised by the State. This official registration brought with it a number of duties and responsibilities for the people involved. While many have dwelt on the changes brought about by the recognition of same sex relationships, the Act also introduced provisions to address the position of cohabiting couples, both same sex and opposite sex couples, where the relationships ended. The redress scheme established in the Act provided a safety net for an economically dependent cohabitant at the end of the relationship, whether by separation or death.

We committed ourselves in the programme for Government to enact any necessary follow-on legislation from the civil partnership Act. The Bill deals with the tax changes necessary to align tax law with general law. It is complex, in so far as it makes necessary amendments to a large number of areas of the tax code. Registered civil partners will receive the same tax treatment as married couples in respect of income tax, stamp duty, capital acquisitions tax, capital gains tax and VAT.

They will be able to avail of the tax bands and tax credits available to married couples. The Bill also provides for similar tax treatment where there is a transfer of property by gift or inheritance for capital taxes and stamp duty purposes.

As I mentioned, the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 also legislated for a redress scheme for cohabiting couples who chose not to marry or register a civil partnership. The redress scheme provides protection in law for long-term cohabiting couples and provides safeguards for an economically dependent cohabitant where a relationship ended by separation or on death. The Bill provides for the tax changes arising from this. For example, in the case of a transfer of property on foot of a court decision under the redress scheme, the transfer will not now be liable to stamp duty. It will also mean the donor of the property will not have a capital gains tax liability on the transfer of the property and that the beneficiary will not be liable to capital acquisitions tax. Without this change, the former cohabiting couple would have been deemed as "unconnected" and subject to full stamp duty, capital gains tax and capital acquisitions tax on transfers of property arising from a separation. A clear anomaly arose in that case which is dealt with in the legislation before Senators today. In addition, if court ordered maintenance payments are made to a former cohabitant who was financially dependent, these will be subject to income tax relief for the person making the payments.

The changes under the Bill will be effective for the year of assessment 2011 and subsequent years. Inheritance tax, gift tax and stamp duty reliefs will apply as and from 1 January 2011. For example, as indicated previously, if a civil partnership was registered in April 2011, the couple will be considered for civil partnership income tax treatment from the date of registration of civil partnership, not from the date of enactment of the Bill. This is in line with the treatment of persons getting married in the usual manner.

The Bill is short and the detail of the tax changes are set out in the Schedules. There are five sections and four Schedules. Sections 1 to 4, inclusive, have related Schedules which deal with the various aspects of the tax code applicable. Section 1 deals with income tax and capital gains tax; section 2 deals with stamp duty; section 3 deals with capital acquisitions tax; section 4 deals with VAT; and section 5 deals with the Short Title, construction and commencement of the Bill.

Section 1 and the related Schedule 1 deal with the income tax treatment of civil partners and the various assessment options available to them. These options are joint assessment, separate assessment or separate treatment. I will outline for Senators what this means in more detail. A couple who are in a registered civil partnership will be deemed to have elected for joint assessment in the absence of an election to the contrary. Under joint assessment, one partner is chargeable to tax, not alone on his or her own total income but also on the total income of the other civil partner. The civil partner who is chargeable to tax on the income of both individuals is known as the "nominated civil partner".

Under separate assessment, each civil partner is assessed on his or her own income with allowances and reliefs divided between the civil partners. Separate assessment is also known as "separate assessment within joint assessment" as one civil partner's unused allowances, reliefs and rate bands may be transferred to the other civil partner. It is the exact same position for married couples in tax law treatment. All this does is extend to civil partners, where their relationship has been registered in law, the same application as in other areas. Under separate treatment, each civil partner is treated for tax purposes as if he or she continued to be single.

The section also deals with maintenance payments for civil partners living apart, and the adaptation of certain provisions to allow for the joint assessment of civil partners living apart or whose partnership has been dissolved or annulled. It also deals with the assessment of civil partners for capital gains tax purposes. It sets out the method of joint assessment, makes provision for applications for separate assessment and provides rules for the transfer between civil partners of unutilised capital losses. As I stated, all of the above provisions follow the practices applicable to and entitlements of married couples.

The section deals with the income tax treatment of a cohabitant in respect of maintenance payments from a former partner where the relationship has ended. As I said, in such cases the person paying the maintenance will have income tax relief in respect of the payment and the person receiving the payment will be liable to income tax on the payment.

Section 2 and the related Schedule 2 give effect to the changes necessary to the Stamp Duties Consolidation Act 1999. In future transfers of property between civil partners will be free from stamp duty in the same way as a transfer between a married couple. The new section to be inserted in the Stamp Duties Consolidation Act 1999 will provide that stamp duty shall not be chargeable on an instrument executed after 1 January 2011 where property is being transferred on foot of a property adjustment order made following the breakdown of a cohabiting relationship under section 174 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010.

Section 3 and the related Schedule 3 give effect to the changes necessary to the Capital Acquisitions Tax Consolidation Act 2003 which will mean that the same CAT reliefs and thresholds available to married couples will now also be available to civil partners. Likewise, children of a civil partner, including children of the other civil partner, will be entitled to the same CAT thresholds as children of married persons.

The section also provides for an exemption from gift and inheritance tax in respect of a court order made under Part 15 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 when a cohabiting relationship ends. As a result, any property transferred, where ordered by the courts, on the cessation of a relationship will not attract a CAT charge for the person receiving the property.

Section 4 and the related Schedule 4 give effect to a single change necessary to the Value-Added Tax Consolidation Act 2010. The change is in relation to the option to tax letting of immovable goods by extending the definition of "connected persons" to include the civil partner of an individual and the civil partner of a relative of the individual or his or her civil partner.

Section 5 contains provisions relating to the Short Title, construction and commencement of the Bill and is self-explanatory.

There was widespread support for the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 when it was debated and passed both in Dáil Éireann and Seanad Éireann last year. The Bill before the Seanad today will help to implement the Act as it relates to taxation and I hope all Senators can fully support it.

It is worth saying the previous Government included these changes in the finance Bill as proposed coming towards the end of the life of the previous Dáil, but given the time constraints at the time, the relevant sections were not continued. All the Bill does is bring forth these provisions again to give effect to the tax changes required to give civil partners the same rights in Irish tax law as married persons. It is a simple and logical extension of legislation already enacted by both Houses of the Oireachtas. I commend the provisions contained in the Bill to the House.