Michael Ring (Mayo, Fine Gael)
Link to this: Individually | In context

Question 214: To ask the Minister for Finance if a person (details supplied) in County Mayo will get the date for completion extended for their Section 23 relief in view of the circumstances in this particular case. [39348/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I am informed by the Revenue Commissioners that the general position in relation to such projects under the rural renewal and other schemes is that qualifying expenditure may be incurred for tax relief purposes up to 31 December 2006 where a valid application for full planning permission in respect of the project was submitted to the relevant local authority by 31 December 2004. However, the Finance Act 2006 extended the deadline for tax relief purposes to 31 July 2008 where work to the value of at least 15% of the actual construction or refurbishment costs is carried out by 31 December 2006. The Finance Act 2006 also provided for a gradual reduction in the amount of expenditure qualifying for tax relief after 31 December 2006. Thus, while expenditure incurred during 2006 can qualify for full relief without restriction, only 75% of expenditure incurred in 2007 and 50% of expenditure incurred in the period 1 January 2008 to 31 July 2008 can qualify for tax relief.

If the person referred to by the Deputy carries out work to the value of not less than 15% of the actual construction costs of the development in question by 31 December 2006, he can avail of the extended 31 July 2008 qualifying period for the purposes of section 23 relief, subject to the restriction mentioned in respect of expenditure incurred after 2006. It should be noted that this "15%" test is based solely on the value of construction work actually carried out on a particular building or development. It takes no account of the cost of acquiring the site or of any costs associated with its acquisition. The value of work and costs associated with site preparation such as site clearance, laying foundations, power supply, drainage, sanitation and water supply can, however, be taken into account. If, on this basis, the value of the work carried out by 31 December 2006 by the person referred to by the Deputy amounts to at least 15% of the overall construction costs of the development, the person may avail of the extended deadline of 31 July 2008 for section 23 relief purposes. However, if the value of work carried out by 31 December 2006 is less that the 15% requirement, then relief will only be available in respect of whatever qualifying construction expenditure is incurred before that date. There is no provision for entitlement to relief beyond 31 December 2006 where the 15% requirements have not been met.

I am also informed by the Revenue Commissioners that their publication, Tax Briefing, issue 65 November 2006, contains an article that provides guidance on the operation of the "15%" test. Tax Briefing is available on the Revenue website, www.revenue.ie, under "Publications".

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context

Question 215: To ask the Minister for Finance the percentage of earners paying tax at the 42% rate; and if he will make a statement on the matter. [39349/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I am advised by the Revenue Commissioners that the most up-to-date estimates of the information requested by the Deputy are as follows:

These figures allow for the fact that many income earners pay no tax at all; many pay tax at a standard rate but pay a much lower average rate because of the application of credits. And for many taxpayers who are, strictly speaking, liable for tax at the higher rate on part of their income, the amount of their liability at the higher rate is fully offset by their tax credits. In fact, tax credits fully offset the 42% liability in the case of all but about 20% of all income earners. Effectively, therefore, many of the "top rate" taxpayers actually pay at an average rate of 20% or less.