Pat Rabbitte (Dublin South West, Labour)
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Question 230: To ask the Minister for Finance if special treatment is given by the Revenue Commissioners in cases where employed persons claim rent tax credit in respect of rent paid to their parents while living in the family home; if so, the basis for such treatment; if there is a requirement that rent must in such cases be charged at a commercial rate in order for the tax credit to be available; if so, if the market value of the family home is taken into account in order to determine a commercial rate; the level within the Revenue Commissioners at which decisions are made on such questions; if a review or appeal process is available; if written guidelines or instructions apply; if rent a room tax exemption applies in these circumstances to parents; and if he will make a statement on the matter. [36105/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am informed by the Revenue Commissioners that Section 473 of the Taxes Consolidation Act 1997 provides for an allowance at the standard rate of income tax for individuals who, for a tax year of assessment, prove that they have paid rent in respect of a residential premises that is their main residence. The definition of rent for the purposes of Section 473 is such that it refers only to the bare right to use, occupy or enjoy the premises and it also excludes payments in respect of the provision of goods and services. For example, payment in respect of 'board and lodgings' would not be considered rent for the purposes of the rent allowance.

Where it appears that a payment is made partly on account of rent and partly on account of an amount which is not rent, Section 473 provides that an apportionment of the payment may be made in order to determine for the purposes of that section the amount paid on account of rent. The legislation further provides that, where such apportionment is required, such apportionment shall be made by an inspector of taxes according to the best of his or her knowledge and judgment.

There is no requirement in Section 473 that, for the purposes of that section, rent must be charged at a commercial rate and, accordingly, the market value of the family home is not a factor for the purposes of Section 473.

There is no special treatment for individuals residing in the parental home wishing to claim the rent allowance. However, in such cases there is the question as to whether an amount paid by such individuals to their parents represents rent within the meaning of the Section 473 or whether such amount represents a payment in respect of board and lodging including items such as heat and light. For example, in the case of working individuals who continue to live with their parents, it would not be considered unusual if such individuals contributed to normal family outgoings. Whether such contribution can be categorised a 'pure rent' or whether it is, or includes, an amount in respect of normal outgoings such as the cost of food, light, heat, etc. is a question of fact to be determined having regard to the facts and circumstances of the relevant case being examined. In addition, claims for the rent allowance are examined on their individual merits and what may prevail in one case may not necessarily be replicated in another case.

The Revenue Commissioners' customer service staff process claims for rent allowance, as they do with claims for other allowances and tax credits. Local managers monitor claims and critically examine a number of such claims as part of their normal compliance programmes. As regards written guidelines and instructions, I am informed by the Revenue Commissioners that staff instructions are in place outlining the basis for the allowance and that staff also have access to the necessary legislation and to the Notes for Guidance to that legislation.

As regards a review or appeal process generally, these are outlined in the Revenue Commissioners' Customer Service Leaflet CS4 available at www.revenue.ie. In brief, there are separate mechanisms in place for persons to:

1. Lodge a customer service complaint about the standard of service received in their personal contact with the Revenue Commissioners, e.g. by phone, correspondence, fax, e-mail or as a caller at one of the Revenue Commissioners' Public Offices.

2. Request an internal review in relation to any aspect of the way in which their tax affairs have been handled (there is also provision for this review to be carried out jointly by an internal and external reviewer).

3. Lodge an appeal under statutory provisions (such appeals are heard, in the first instance, by the Tax Appeal Commissioners). Section 473(7) of the Taxes Consolidation Act 1997 outlines a specific right of appeal against apportionment and any person who is aggrieved by a decision of an inspector as regards such apportionment may, by notice in writing to that effect given to the inspector within thirty days from the date on which notice is given by the inspector, make an application to have his or her claim for relief heard and determined by the Tax Appeal Commissioners. In addition, any person dissatisfied with any aspect of Revenue's handling of his/her tax affairs may take the matter up with the Office of the Ombudsman.

Finally, where an individual rents out a room (or rooms) in a qualifying residence (being a residential premises in the State, which is occupied by that individual as his or her principal private residence during the year of assessment) and the gross amount received by that individual, including sums arising for food, laundry or similar goods and services does not exceed €7,620, then such income will be exempt from income tax. Parents in receipt of amounts paid by persons living in the parental home are not precluded from entitlement to the rent a room exemption.

Eamon Ryan (Dublin South, Green Party)
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Question 231: To ask the Minister for Finance if he will change the system of benefit in kind in order that the tax burden would no longer decrease in inverse proportion to the number of miles covered and the size of the vehicle's engine. [36145/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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There are special rules for estimating the value of the benefit of company provided cars which are available for the private use of employees. Where annual business mileage is 15,000 miles or less the benefit of the car is calculated at 30% of the original market value with this figure reducing in the context of higher annual business mileage categories. For example, where the business mileage is 30,001 business miles and over the cash benefit is calculated at 6% of the original market value of the car.

This tapering of rates is designed to ensure that employees who need to travel significantly in the course of their work can incur a lower benefit-in-kind charge, based on their actual yearly mileage. There is no evidence to suggest that this encourages employees to artificially increase their business mileage in order to maximise their tax position. Indeed as such an approach would result in additional costs for employers (e.g. by way of extra fuel costs) they would be unlikely to countenance it. Overall I would regard the current scheme as relatively neutral in terms of its effect on the environment.