Written answers

Wednesday, 2 February 2005

9:00 pm

Photo of Mary UptonMary Upton (Dublin South Central, Labour)
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Question 219: To ask the Minister for Finance his plans to allow cohabiting couples avail of the married persons tax credit; and if he will make a statement on the matter. [2948/05]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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Generally speaking, the tax system treats cohabiting couples as separate and unconnected individuals. Each partner is a separate entity for tax purposes, and credits, bands and reliefs cannot be transferred from one partner to the other.

The working group examining the treatment of married, cohabiting and one-parent families under the tax and social welfare codes, which reported in August 1999, was sympathetic, in principle, to changes in the tax legislation to address the issues raised relating to cohabiting couples and reported that the options that it set out should be considered further. However, it acknowledged with regard to the tax treatment of cohabiting couples that a key issue is whether tax law should proceed ahead of changes in the general law.

I also draw the Deputy's attention to the consultation paper on the rights and duties of cohabitees, which was published in April 2004 by the Law Reform Commission. That paper indicated that in light of the current policy on individualisation of the tax bands, the commission was not recommending any change to the income tax treatment of cohabiting couples.

I put it on the record of the House previously that I would view as problematic and unwise a situation where changes in the tax code would set a headline in advance of developments in other relevant areas of public policy, for example, in the area of legal recognition of relationships other than married relationships. I am still of that view.

It has been the practice of successive Ministers for Finance not to comment in the run up to the annual budget and Finance Bill process on what may or may not be included in that process. I do not intend to depart from that practice.

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