Róisín Shortall (Dublin North West, Labour)
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Question 294: To ask the Minister for Finance the tax implications, including stamp duty and capital acquisitions tax, for a first-time buyer and their parent if their parent purchases a home or a substantial portion of the home for the first-time buyer; and if he will make a statement on the matter. [9676/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that the tax implications, where a parent of a first-time buyer is involved in the purchase of a home for the first-time buyer, will depend on the nature of the parent's involvement in the purchase. I will deal with the different taxes in turn.

Stamp Duty

Where the parent makes a cash gift to a child of all or part of the purchase monies to enable the child to purchase a house, there is no stamp duty liability on this gift. The stamp duty relief for first-time buyers would apply where the monies gifted are used by the child in purchasing a house in his own name provided the child had not previously purchased or received a gift of another house.

Where a house is purchased by a parent and subsequently gifted to a child who is a first-time buyer, a liability to stamp duty would arise in the first place on the purchase of the house by the parent. The subsequent gift of the house by the parent to the child would qualify for first-time buyer relief where the child had not previously purchased or received a gift of another house.

Where a house is purchased in the joint names of a parent and a child, the first-time buyer relief is only available where each of the purchasers is a first-time buyer. Therefore, the relief would not be available where the parent had previously purchased another house.

Capital Acquisitions Tax (Gift and Inheritance Tax)

Whether gift tax arises when a parent purchases a home or a substantial portion of the home for a child depends on the circumstances. The Finance Act 2000 introduced a package of measures specifically designed to reduce the impact of gift/inheritance tax for certain dwelling houses. The purpose of this exemption was to benefit individuals who had been living in a house for a period prior to taking the benefit, either by way of gift or inheritance. The main conditions attaching to the exemption are that the beneficiary of the dwelling house must have resided in the house for a minimum of 3 years prior to the gift/inheritance and must not have an interest in any other dwelling house. Also, the recipient or recipients must continue to occupy that dwelling house as his/her only or main residence for a period of 6 years commencing on the date of the gift/inheritance. Therefore, a parent can purchase a home or portion of a home in the parent's own name and subsequently transfer that home or their interest in that home to the child and, if the child, at the date of the transfer of the home to them, satisfies the above conditions, the transfer of the home to the child is exempt from Capital Acquisitions Tax.

If this exemption does not apply, depending on the circumstances of the case, then the normal Capital Acquisitions Tax computational rules set out below will apply to the gift of the dwelling house or alternatively to the gift of any purchase monies gifted to the child to enable the child to purchase the property directly in the child's own name in the first instance.

For the purpose of both Gift and Inheritance Tax, the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary), determines the maximum tax-free threshold- known as the "Group threshold".

The indexed Group threshold applying to a gift or inheritance received by a child from their parents is the Group A threshold and for 2007 this Group A threshold is €496,824.

Any other gifts/inheritances that might have been received by the beneficiary from within the same Group A threshold (i.e. from parents) since 5 December 1991 will also be taken into account when applying the threshold for the purposes of calculating the gift/inheritance tax. If the total value of all gifts and inheritances received by the beneficiary since this date from within this Group is above the threshold figure of €496,824, then a 20% rate of gift/inheritance tax will apply on the difference.

Capital gains tax (CGT)

CGT is chargeable on a transfer of ownership in an asset whether by way of sale, gift or otherwise. Cash is not an asset for CGT purposes. The subsequent disposal by a parent of a house or an interest in a house, which was purchased for a child, whether by way of a transfer to that child or a sale to a third party, is a chargeable event for CGT purposes. To the extent that the gain is attributable to the parent, main residence relief wouldn't apply. Where the house is wholly or partially owned by the child, any gain attributable to the child on a sale would be exempt from CGT provided he/she occupied the house as an only or main residence throughout the period of ownership or occupied it to within 12 months of sale.

Pat Carey (Dublin North West, Fianna Fail)
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Question 295: To ask the Minister for Finance the course open to a person (details supplied) in Dublin 11 who has incurred significant medical and other expenses in respect of which, were they in the tax net, they could apply for a tax refund, but as their wages are too low this course of action is not open to them; and if he will make a statement on the matter. [9752/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I have been advised by the Revenue Commissioners that as the person's tax credits are sufficient to cover the tax due on her total income, she has no liability to tax. Under the provisions of sections 469 of the Taxes Consolidation Act 1997 (relief for health expenses), refunds can only be made in respect of health expenses where there is tax available to repay. As the person in question did not pay any tax, there is no tax available to refund to her.

Tony Gregory (Dublin Central, Independent)
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Question 297: To ask the Minister for Finance if there is a second charge on persons who cancel credit cards; and if he will review this inequitable double taxation in the one year. [9755/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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A person who holds a credit card account with a credit card provider pays stamp duty on that credit card account once for each 12 month period ending on 1 April each year. Where a person cancels a credit card account within a 12 month period he/she pays the charge at the time of cancellation. This means that, in respect of any credit card account, an individual will only pay once for the year ending on the following 1 April. Where the individual closes a credit card after 1 April in any year, a stamp duty charge of €40 will arise, as the account has been maintained by the financial institution during the year ending on the following 1 April. This is consistent with applying a stamp duty charge for a year or part of a year for which the credit card account is held.

However, Section 128 of the Finance Act 2005 contained measures to eliminate a double stamp duty charge for the same year on the switching of financial cards. Where a credit card account is closed in the tax year the financial institution will issue a Letter of Closure to the holder of the account stating that the stamp duty has been paid for that year. Where the individual opens a new credit card account at any point in that tax year, the new financial institution, upon receipt of the Letter of Closure, will provide that the stamp duty on the new credit card, normally charged in the following April, will not be applied.