Written answers

Thursday, 17 April 2008

5:00 pm

Photo of Joe CareyJoe Carey (Clare, Fine Gael)
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Question 103: To ask the Tánaiste and Minister for Finance the number of employers that still use tax deduction cards; the measures he has put in place to facilitate these employers from 1 January 2009 when it is proposed to discontinue the issuing of TDCs; and if he will make a statement on the matter. [14847/08]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I am informed by the Revenue Commissioners that in January 2008 when they issued tax credit details incorporating the Budget changes, a total of 449,000 individual Tax Deduction Cards (TDCs) were issued to Employers. This figure represents 17.5% of the total employments of 2.56m on record at that time.

In an attempt to identify the number of Employers using TDCs for their intended purpose, in 2007 the Commissioners conducted a survey of Employers in receipt of TDCs. The result of this survey revealed that over ninety percent of the Employers surveyed no longer used TDCs to operate the PAYE cumulative system and calculate the net pay of their employees. Instead, they used computerized payroll systems. It is clear therefore, that the requirement by employers for the use of paper TDCs has been greatly reduced.

In the context of an on-going review by Revenue of service delivery channels to ensure their continued relevance and effectiveness, including cost effectiveness, it is now proposed to discontinue the issue of TDCs to all employers with effect from 1st January 2009. (It should be noted that the issue of TDCs to new employers was discontinued in January 2006).

The Commissioners have decided to introduce the following options for Employers to replace the issue of paper TDCs from 1st January 2009.

Continue to issue paper copies of employee Tax Credit Certificates (TCC) to Employers who are currently receiving TDCs. These certificates contain all the information required to enable an Employer to operate the PAYE system.

Provide an electronic version of the existing TDC on their website www.revenue.ie later this year. This will allow an Employer to enter Employee details and automatically calculate the weekly/fortnightly/monthly deductions as they were previously shown on the TDC. This web based TDC can then be printed and used in the same way as the existing TDC.

Employers can also opt to receive Tax Credit Certificates for their Employees through the Revenue On-Line Service (ROS). This is a fast, efficient and secure service through which in excess of 70% of Employee Tax credit Certificates are already delivered to Employers.

Revenue will continue to remind Employers that the issue of paper TDCs will be discontinued from 1st January 2009 and to inform them of the options they will have in relation to receiving pay and tax details for their Employees from that date. An Employer who is seeking further information or assistance on this matter should contact the Revenue Employers Helpline at 1890 25 45 65.

I am satisfied that the measures to be rolled out by Revenue to replace paper TDCs will ensure that no employer will be disadvantaged. I am further satisfied that the options being introduced represent an appropriate response to changing circumstances and will ensure that resources are deployed effectively while continuing to offer employers a choice of alternatives through a variety of different service channels.

Photo of Jack WallJack Wall (Kildare South, Labour)
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Question 104: To ask the Tánaiste and Minister for Finance the taxes a property owner is required to pay when leasing property the applicant in the first instance used as their own home; and if he will make a statement on the matter. [14922/08]

Photo of Jack WallJack Wall (Kildare South, Labour)
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Question 105: To ask the Tánaiste and Minister for Finance the tax benefits a property owner can claim against income obtained from the leasing of property that was formerly the person's home; the effects such leasing would have on a mortgage tax relief that the person obtained on their home; and if he will make a statement on the matter. [14923/08]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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I propose to take Questions Nos. 104 and 105 together.

I am informed by the Revenue Commissioners that, where a property owner vacates his or her own home and leases the property, the rental income arising from such a letting is liable to income tax after allowing for the cost of maintenance, repairs, insurance and mortgage interest on borrowings to purchase, repair or improve the property. The property owner is also liable to PRSI and the Health Levy on the rental income. The letting of a property which was formerly a person's home will not result in a clawback of mortgage interest relief claimed once the property was the claimant's sole or main residence during the period of claim.

Where a property owner does not vacate a property and continues to occupy it as his or her sole or main residence but lets a room or rooms in the property for residential purposes he or she may be entitled to avail of a relief known as rent-a-room relief. This applies where the gross income received from the letting does not exceed €10,000 per annum (previously €7,620 prior to 31 December 2007). Gross income for the purposes of the relief includes any amount received for meals, cleaning, laundry or other similar goods and services that are incidentally provided in connection with the residential use. Where the gross income received does not exceed the limit, the income is exempt from Income Tax, PRSI & the health levy. No deduction is allowed for any expenses that have been incurred in generating that income. Where the gross income received exceeds the limit, it is treated as rental income and is subject to income tax, PRSI and health levy in the normal way. The receipt of rent under the rent a room relief scheme does not affect an individual's entitlement to mortgage interest relief on his or her principal private residence.

I am also informed by the Revenue Commissioners that certain provisions of the Stamp Duties Consolidation Act 1999 provide for relief from stamp duty for first time purchasers of both newly built and second-hand houses and apartments and for other owner-occupiers who purchase newly built houses or apartments. However, this relief is subject to a clawback where a property is vacated by its owner and rental income received from its letting within a period of 2 years (previously 5 years prior to 5 December 2007) from the date of its purchase. However, a clawback of stamp duty relief would not occur where a property owner let a room or rooms in his or her property while at the same time remaining in occupation of the property himself or herself.

Finally, I am also informed by the Revenue Commissioners that tax relief can be claimed against rental income for capital expenditure incurred, on or after 6 April 2001 and before 31 July 2008, on the refurbishment of certain rented residential accommodation. However, as part of and in line with the phasing out of property incentive schemes generally, only 75% of expenditure incurred during 2007 and 50% of expenditure incurred in the period 1 January 2008 to 31 July 2008 qualifies for relief. The expenditure is allowed as a deduction over a 7-year period at the rate of 15% per annum for the first 6 years and 10% in year 7. To qualify, the premises must be used as a residential dwelling. From the date of completion of the refurbishment, the premises must be let in its entirety under a qualifying lease throughout a period of 10 years from the date of completion of the work or, if later, the date of the first letting. The lessor must comply with the regulations in relation to standards for rented houses, rent books and registration of rented houses. From 1 January 2006 entitlement to relief under this scheme is conditional on compliance with the registration requirements of Part 7 of the Residential Tenancies Act 2004.

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