Barry Andrews (Dún Laoghaire, Fianna Fail)
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Question 266: To ask the Minister for Social and Family Affairs the reason losses are not allowable against profits in calculating PRSI; and if he will make a statement on the matter. [36790/05]

Séamus Brennan (Dublin South, Fianna Fail)
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Liability for social insurance contributions is governed by social welfare legislation and the provisions provided therein. The Social Welfare (Consolidation) Act 2005 sets out the income liable to social insurance contributions from self-employed contributors. The basis of assessment or reckonable income of a self-employed is defined as meaning the aggregate income, excluding reckonable earnings, reckonable emoluments and any other income that may be prescribed, from all sources for the contribution year as estimated in accordance with the Income Tax Acts, but without regard to artists exemptions, profits from stallions, woodlands and other issues relating to the taxation of married couples.

The definition provides that some elements of income, which would normally be exempted from income tax, such as artist's exemptions, profits from woodlands and stallions, are not similarly exempt from liability for social insurance contributions.

Equally, it provides that aggregate income is the basis of assessment used for the purposes of assessing liability to social insurance purposes and not the total income basis used for the calculation of income tax liability. While total income provides for loss relief, the definition of aggregate income does not.

As such, social insurance is calculated on all reckonable income in that year and does not provide for the deduction of losses carried forward from a previous year in the calculation of liability for PRSI. The approach supports the solidarity and contributory principles that underpin the social insurance system.