Written answers

Thursday, 15 December 2005

5:00 pm

Photo of John CreganJohn Cregan (Limerick West, Fianna Fail)
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Question 200: To ask the Minister for Finance the threshold for inheritance tax between brothers and sisters; if same is different if persons live together; when these thresholds were last adjusted; and if improvement is under construction. [39924/05]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The threshold for inheritance tax between brothers and sisters is the group B threshold, which was €46,673 for the year 2005. The group thresholds are indexed annually by reference to the consumer price index. Any other gifts-inheritances received by the beneficiary from within the same group B threshold — that is, from uncles, aunts, brothers, sisters or grandparents — since 5 December 1991, will also be taken into account when applying the threshold for the purpose of calculating inheritance tax.

The inheritance tax threshold is the same, irrespective of whether the brothers and sisters are living together. However, section 151 of the Finance Act 2000 introduced a valuable exemption from gift-inheritance tax for certain dwelling houses. The purpose of the exemption is to benefit individuals who have been living in a house for a period prior to taking the benefit, either by way of gift or inheritance. The main conditions of the dwelling house exemption are that the beneficiary of the dwelling house must have resided in the house for a minimum of three years prior to the gift or inheritance and must not have had an interest in any other dwelling house. The beneficiary must also continue, except where he or she is aged 55 years or over at the date of the gift or inheritance, to occupy that dwelling house as his-her only or main residence for a period of six years commencing on the date of the gift or inheritance. This exemption ensures that what may be the family home for many people will not be subject to gift or inheritance tax when it is transferred.

In addition to the introduction of the dwelling house relief, the Finance Act 2000 also increased the capital acquisitions tax, CAT, exemption thresholds and introduced a single rate of CAT at 20%. These measures were specifically designed to reduce the impact of gift-inheritance tax where assets with average values are transferred. I have no plans at present to make any further changes to the CAT system.

Photo of Dan BoyleDan Boyle (Cork South Central, Green Party)
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Question 201: To ask the Minister for Finance if female clergy and spouses of other taxpayers are not open to have their tax assessed individually. [39934/05]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that a married couple living together is deemed to have elected for joint assessment commencing with the year following the year of marriage. However, notwithstanding this, either spouse may elect to be taxed either: (a) as if the marriage had not taken place — i.e. to be taxed as single individuals); or (b) under separate assessment — that is, taxed as single individuals with the proviso that the joint tax liability of the couple under separate assessment cannot exceed that which would apply if they had elected to be taxed under joint assessment. The Revenue explanatory leaflet, IT 2 Taxation of Married Couples, is available on the Revenue website, www.revenue.ie.

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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Question 202: To ask the Minister for Finance his Department's original estimated VAT bill to be paid on the lease of the passport facility at Balbriggan; the amount of VAT actually paid; and if he will make a statement on the matter. [40139/05]

Tom Parlon (Laois-Offaly, Progressive Democrats)
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The VAT on creation of this lease was originally estimated for budgetary purposes at over €1 million. The actual amount paid was €978,750.00.

Under the relevant Revenue regulations, the landlord is free to choose one of three methods of calculation of the VAT and the result must pass an economic value test, designed as an anti-evasion measure.

On completion of this agreement the OPW notified the Revenue Commissioners' special inquiries branch of the terms of the lease. It is also a condition of the lease that a valid tax clearance certificate is produced by the landlord on an annual basis to allow rent and other charges to be paid to him.

Paul McGrath (Westmeath, Fine Gael)
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Question 204: To ask the Minister for Finance the tax liability in 2006 of a single income married couple with principal earnings (details supplied) and where the spouse has income of €10,000 and €10,000 from minding three children in their own home. [40155/05]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The tax liability in the scenarios outlined by the Deputy will be as follows:

Scenario 1 — Tax liability for 2006 of a married couple, the main earner having PAYE income of €41,000, and the spouse with non-PAYE income of €10,000 and a further €10,000 from minding three children in the couple's own home.1

Total joint income of couple€61,000

Less exempt childminding income€10,000

Net joint taxable income of couple€51,000

Tax of main earner €41,000 @ 20% =€8,200

Tax of spouse €10,000 @ 20% =€2,000

Gross tax due€10,200

Less tax credits

Married credit (€3,260)

PAYE credit (€1,490)(€4,750)

Net tax payable€5,450

Note: If the income from childminding exceeds €10,000, then all the income from childminding will be taxable under self assessment.

Scenario 2 — Tax liability for 2006 of a married couple, the main earner having PAYE income of €64,000, and the spouse with non-PAYE income of €10,000 and a further €10,000 from minding three children in the couple's own home.1

Total joint income of couple€84,000

Less exempt childminding income€10,000

Net joint taxable income of couple€74,000

Tax of main earner €41,000 @ 20% =€8,200

€23,000 @ 20% =€9,660

Tax of spouse €10,000 @ 20% =€2,000

Gross tax due€19,860

Less tax credits

Married credit (€3,260)

PAYE credit (€1,490)(€4,750)

Net tax payable€15,110

1childminding scheme as outlined in the Minister's Financial Statement in Budget 2006.

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