Jerry Cowley (Mayo, Independent)
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Question 361: To ask the Minister for Social and Family Affairs his plans to recognise the role of farm spouses by permitting spouses and partners to make PRSI contributions in order to qualify themselves for the range of self-employed social insurance benefits; and if he will make a statement on the matter. [34120/05]

Séamus Brennan (Dublin South, Fianna Fail)
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Current social welfare legislation excludes spouses from PRSI liability as both employed and self-employed contributors. This exclusion recognises the practical difficulties in establishing the nature of a genuine employment relationship in circumstances such as when a person employed under a contract of service, that is as an employee, by his or her spouse is classed as an "excepted" contributor under social welfare law. As a result, farming spouses can only pay PRSI if they are involved in one of three scenarios.

First, spouses who are actively engaged in a commercial partnership, as opposed to simply being the joint owners of a property, are treated as individual self-employed contributors and are thus liable to social insurance contributions. These contributions made under PRSI class S enable them to build up an insurance record in their own right and to receive accruing benefits. A partnership is commonly understood to be an association of two or more persons for the purpose of gain or of sharing in the work and profits of an enterprise. Liability for PRSI contributions is not contingent on the ownership of property but rather on the nature of the business arrangements between the couple. Co-ownership of property does not in itself create a partnership.

Second, where a family business in incorporated as a limited company, spouses involved in the business can establish a social insurance record as either employees or as self-employed contributors, depending on whether a contract of service exists.

Third, it is known that persons engaged in farming are increasingly taking up off-farm employment. This enables farming spouses who might otherwise not be insured to develop a social insurance record on the basis of their off-farm earnings. Also, farming spouses who were previously employed are able to maintain their social insurance coverage in the long term by contributing to the voluntary PRSI contribution scheme.

The legislation that exempts spouses who assist in family enterprises such as farming from liability to social insurance has been the subject of review on a number of occasions. In 2002, an interdepartmental group chaired by the Department of Agriculture, Food and Rural Development concluded that the formation of business partnerships offers an immediate route of access to social insurance cover as it is based on existing legislation. Such arrangements would not impose any significant additional administration costs on farm business. For example, couples who are liable for income tax under joint or separate assessment will continue to make one income tax return each year, the only change being that the income of the farm enterprise will be apportioned in accordance with the partnership arrangements.

A social partnership group that included representatives from various local and national farming organisations recently considered how the social insurance framework in Ireland should develop to become more inclusive. The report of the group, published in June of this year, acknowledged the significance of the partnership option and recommended that more information on the tax and social welfare implications of families working in either a partnership or limited company be made available. This recommendation is presently being progressed.

The matter will be kept under review.