Mary Upton (Dublin South Central, Labour)
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Question 49: To ask the Minister for Finance further to Parliamentary Question No. 108 of 8 May 2008, the amount of tax that has been deducted from the tax credits from these tenants (details supplied); if he will refund these tax credits to the tenants as they were not aware of the requirement to deduct a portion of their rent and this was not communicated to them by their landlord; and his views on whether this rule should not be applied so inflexibly or rigidly as to create inequity. [18984/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am advised by the Revenue Commissioners that as the tenants in question pay rent to a non-resident landlord, they are obliged to deduct income tax at the standard rate (20%) from the rental payments and pay that amount over to the Revenue Commissioners.

Where the tenants are PAYE taxpayers, and the amount due to be withheld is not paid over directly to Revenue, it can be collected through the PAYE system by restricting total tax credits by the appropriate amount.

For the year 2008, the tenants' total tax credits are being restricted by €2,078.40 on the basis of an estimated monthly rent of €866. (The figure of €2,078.40 is 20% of €866 multiplied by twelve.) I am advised that Revenue's Dublin Region will shortly be in touch with the tenants to establish the full facts and circumstances and that any appropriate adjustments for 2008 will be made after the position has been clarified. I am further advised that Revenue will not be restricting the tenants' tax credits for any years prior to 2008.

While there is a need to ensure that Irish income tax is collected on rental income paid abroad, the application of the obligation on tenants to withhold tax on rental payments to non-residents can give rise to some practical difficulties in some circumstances — this has already been commented on by my predecessor in the course of this year's Finance Act debates and my Department and Revenue officials have been asked to review the scheme and see whether better arrangements can be made.