John Cregan (Limerick West, Fianna Fail)
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Question 95: To ask the Tánaiste and Minister for Finance the situation in relation to the tax treatment of the cost of private carers; if such costs are fully allowable against tax for the person being cared for or for a relative of same; if the service must be provided by a formal company; if informal services can also be claimed for; and if he will make a statement on the matter. [18358/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am informed by the Revenue Commissioners that Section 467 of the Taxes Consolidation Act 1997 allows a deduction from an individual's total income for tax purposes in respect of the costs incurred by that individual of employing another person to take care of himself or herself or a relative who is totally incapacitated by reason of physical or mental infirmity. For the purposes of the deduction, a "relative" includes a relation by marriage and a person in respect of whom the person claiming the deduction is the legal guardian. If the individual claiming the deduction is jointly assessed for income tax, he or she can claim a deduction in respect of a carer employed by his or her spouse. An individual claiming a deduction under this provision cannot also claim the dependent relative tax credit or the incapacitated child tax credit.

The amount which can be claimed as a deduction is the lesser of (a) the amount ultimately borne by the individual or his/her spouse in the year of assessment in employing the employed person, or (b) €50,000. If two or more individuals are entitled to claim this deduction in respect of the same incapacitated individual, the aggregate of the deductions granted to them shall not exceed €50,000, and the relief granted to each individual shall be in proportion to the amount of the employment cost he or she has borne. Any amount recovered from the Health Service Executive or a local authority in respect of the costs of employing the carer is deducted from the amount claimable.

The individual claiming the deduction can employ the carer directly, or he or she can employ the carer through an agency. If the individual employs the carer directly, he or she will have to register with the Revenue Commissioners as an employer and operate PAYE and PRSI in order to qualify for the deduction.

If certain conditions are satisfied, relief for health expenses under section 469 Taxes Consolidation Act may be available in respect of constant nursing care provided by a fully qualified nurse in the patient's home. For the tax year 2007 and subsequent years, if health expenses relief is granted, relief will not be given under any other provision of income tax legislation in respect of that amount. More information is available on the Revenue website www.revenue.ie (leaflet IT47, Employed Person Taking Care of an Incapacitated Individual; and Guidelines to Health Expenses — Qualifying Expenses and Rates under Hot Topics — Medical Expenses).

John Cregan (Limerick West, Fianna Fail)
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Question 96: To ask the Tánaiste and Minister for Finance the trace changes in exemption limits for pensioners, single or couples over the past ten years; if he will provide inflation CPI figures for corresponding years to show real or true increase in the income tax exemption limits; and if he will make a statement on the matter. [18359/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The age exemption limits apply to income earners aged 65 or over. Where an elderly individual or married couple has income at or below the limits, no income tax is payable. In 1997, the limits had a value of €5,841/€11,682 (single/married) for earners aged 65 to 74 with increased values of €6,603/€13,206 (single/ married) applying in the case of couples aged 75 or over. For 2007, the limits are €19,000/€38,000 (single/married). The distinction in the limits which applied between those aged under 75 and those aged over 75 was removed in 1999.

The position is that in the ten years since 1997, the age exemption limits have increased in value by 225% if the lower limits of €5,841/€11,682 for those aged 65 to 74 are taken as a base or by 187% if the higher limits of €6,603/€13,206 for those aged 75 or over are used instead. CPI inflation from the end of 1997 to the end of 2007 is estimated at 41.5% on a cumulative basis. In real terms, therefore, the value of the age exemption limits has more than doubled since 1997.

Full details of the age exemption limits as they applied for in each year since 1997 are available on my Departments website at www.finance.gov.ie under the heading of Policy Areas and Publications (Taxation Issues).