Catherine Murphy (Kildare North, Independent)
Link to this: Individually | In context

Question 122: To ask the Minister for Finance if his attention has been drawn to the fact that where maintenance is paid by one parent to another on a voluntary basis tax relief cannot be applied for although such relief can be obtained by parents who have been compelled by court order to make maintenance payments; his views on the introduction of tax reliefs similar to those available to married couples, to single or separated and unmarried parents whereby both parents may avail of tax relief on creche and maintenance costs; and if he will make a statement on the matter. [4098/07]

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

Section 1025 of the Taxes Consolidation Act 1997 provides for the taxation treatment of payments made under legally enforceable arrangements by one spouse of a marriage to the other spouse in consideration, or in consequence, of the annulment or dissolution of a marriage or where the couple are separated. Legally enforceable arrangements include court orders, arbitration awards and deeds of separation including foreign orders and arrangements.

Where legally enforceable maintenance arrangements apply, the general position is that:

the spouse who pays the maintenance is entitled to a tax deduction for payments made for the benefit of the other spouse,

the maintenance payments are taxed in the hands of the receiving spouse,

the couple are treated for tax purposes as if unmarried.

In effect the maintenance payment is treated for tax purposes as if it was the income of the recipient and not the payer.

However, a separated couple may (except where a civil annulment has been obtained) jointly elect to be treated for tax purposes as if the separation had not taken place (provided they are both resident in the State and, if divorced, neither have remarried). When such an election is made, then the maintenance payments are ignored for tax purposes. The payer does not receive a tax deduction for them and the receiving spouse is not taxable on them.

In the case of non-legally binding maintenance payments, such payments are not taxable in the hands of the receiving spouse and the paying spouse cannot claim a tax deduction for them.

Where a relationship other than a married relationship dissolves, the income tax code makes no special provision in respect of the tax treatment of maintenance payments which may be made by one party to the other. There are no plans to change this arrangement which reflects, in part at least, the fact that, in such circumstances, no legal duty of financial support would have existed in the first place between the parties concerned.

I might also inform the Deputy that no special tax relief exists for married parents in respect of childcare, crèche costs or the general maintenance of their children. To the extent that the State supports parents in respect of their children, this is mainly done through the direct expenditure route in the form of Child Benefit payments and the Early Childcare Supplement and no distinction is made in this regard between married and unmarried parents.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Question 123: To ask the Minister for Finance if his attention has been drawn to the escalation of stamp duty costs on young families; and his views on measures to relieve this. [4121/07]

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

The stamp duty code provides assistance in a variety of ways to young families who are entering the property market for the first time. In the case of new houses bought by owner-occupiers, whether first-time buyers or others, there is no stamp duty where the overall size of the property does not exceed 125m2. First-time buyers of second-hand residential property are exempt from stamp duty on properties valued at €317,500 or less and varying rates apply on properties of greater value. I would point out that 75% of second-hand properties purchased by first-time buyers nationally in the first half of 2006 were below the stamp duty threshold.

The recent Budget also provided assistance to young families who are first-time buyers, through mortgage interest relief. I doubled the ceiling up to which mortgage interest relief is available for first-time buyers from €4,000/€8,000 per year to €8,000/€16,000 per year single/married. This will give first-time buyers up to an extra €67/€133 per month (approx €800/€1,600 per year) single/married in actual relief on top of the existing relief of €67/€133 per month single/married.

Where young families who already own property are trading up, any stamp duty liability that may occur is generally offset by the increase in the value of their previous property, which is not liable to taxation for owner-occupiers.