Paul Kehoe (Wexford, Fine Gael)
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Question 184: To ask the Minister for Finance his views on the recently introduced regulation for banks and other financial institutions to provide details on customers where interest is in excess of €635; his further views on the initiative announced by the Revenue Commissioners in respect of older people who might have €10,000 to €30,000 invested and are receiving in excess of €636 per annum, withdrawing their money and keeping it in the house as was done in the past; if banks and building societies are involved, the reason the credit unions have been exempted from this scheme; and if he will make a statement on the matter. [22608/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The regulations referred to are the "Return of Payments (Banks, Building Societies, Credit Unions and Savings Banks) Regulations 2008" which give partial effect to the provisions of section 891B (inserted by section 125 of the Finance Act 2006) of the Taxes Consolidation Act 1997 which section allows the Revenue Commissioners to make regulations with the consent of the Minister for Finance requiring financial institutions, assurance companies, collective funds and State bodies to make an annual return of customers resident in the State to whom interest or other payments are made.

These particular regulations provide for the reporting by banks, building societies, credit unions and the Post Office Savings Bank of interest and other payments made to customers in the year 2004 and each subsequent year where the payment made in respect of an account exceeds €635.

I am advised by the Revenue Commissioners that the disclosure initiative recently announced by them relates to holders of large accounts who have undeclared tax liabilities. Specifically, the initiative relates to taxpayers who held in aggregate €100,000 or more in interest bearing accounts at any time in 2005, 2006 or 2007 and who have undeclared tax liabilities associated with the funds in these accounts. These taxpayers now have the opportunity of coming forward voluntarily, and paying their outstanding liabilities and provided they meet the conditions laid down, will pay reduced penalties, will not be published in the quarterly lists in Iris Oifigiúil or face prosecution. Revenue have published a series of FAQs which will be of assistance to taxpayers and they may be accessed on their website www.revenue.ie. Revenue is also operating a helpline (01-6474818) that taxpayers can contact if they have any questions on the initiative.

Revenue has emphasised, and I would like to repeat, that the initiative is focused on large deposit accounts and will affect a relatively small number of tax evaders: the vast majority of taxpayers have no need to worry.

Taxpayers who have accounts holding €100,000 or more, where the funds originate from savings from after tax income; tax free retirement lump sums; or the proceeds of the sale of their principal private residence, for example, are not required to make a disclosure under this initiative.

Additionally, there is absolutely no necessity for any person to withdraw funds from any financial institution and I would strongly advise against this course of action.

Credit Unions are within the scope of the Regulations and the first reports for Credit Unions will relate to interest payments made in 2008.

Billy Timmins (Wicklow, Fine Gael)
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Question 185: To ask the Minister for Finance the position in relation to a person (details supplied); if, in view of the fact that the person's brother died on 19 June 2007 but probate was not completed until 18 February 2008, the group B threshold of €52,121 for 2008 will apply and not the €49,000 threshold; if, as the person is liable for interest at the moment despite the fact that the house is on the market and waiting for the sale to be closed and with regard to the three years prior to the inheritance and tax exemption as the beneficiary did reside in the house until his or her twenties, this constitutes certain circumstances; if the house is exempt from gift or inheritance tax or a reduction in same; and if he will make a statement on the matter. [22616/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am advised by the Revenue Commissioners that when a person takes an inheritance on the death of another person, the tax-free Group threshold figure applying to that inheritance is the tax-free Group threshold figure applicable as at the date of death of the deceased person and not that applicable as at the date of the completion of the probate of the estate.

In this case, as the deceased person died in 2007, the tax-free Group threshold figure that applies to the inheritance taken by the deceased's brother is the 2007 tax-free Group threshold figure of €49,682.

Apart from the tax-free Group threshold figure available to a beneficiary, the Capital Acquisitions Tax code (Gift and Inheritance Tax) exempts certain gifts and inheritances completely from tax and also contains relieving provisions.

For example, an inheritance of a dwelling house is exempt from inheritance tax in certain circumstances. If a beneficiary receives an inheritance of a dwelling house, the inheritance of that house will be exempt from inheritance tax if the beneficiary has resided in the house for a minimum of 3 years prior to the inheritance and if the beneficiary has no interest in any other dwelling house. The 3-year residency requirement is a minimum requirement for the exemption to apply. This exemption ensures that what may be the family home for many people will not be subject of any tax when it is the subject of an inheritance.

A beneficiary in an estate is required to make a self-assessment tax return where benefits of at least 80% of the tax-free threshold figure are received. The return must be filed and the tax liability paid within 4 months of the valuation date of the inheritance to avoid interest charges.

In normal circumstances, the valuation date of an inheritance is the date the probate to the estate is extracted and, accordingly, the beneficiary would have 4 months from that date to file the return and pay any tax due.

The legislation provides for payment of the tax by 5 equal yearly instalments and also provides for situations of hardship or illiquidity where such instances may be dealt with by postponement of payment in certain cases.

The beneficiary of the dwelling house should contact their particular Revenue Region dealing with the matter and set out the circumstances fully with regard to payment of the tax whereupon the position will be fully considered.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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Question 186: To ask the Minister for Finance the reason a person whose landlord lives outside the country must deduct the standard rate of tax themselves from the rent payable; his plans to review this situation; and if he will make a statement on the matter. [22628/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that where rents are paid directly to a person who is resident outside the State, the tenant is obliged to deduct income tax at the standard rate of 20% from the rental payment and to give the landlord a certificate of the tax deducted. Direct payments include a situation where rent is paid into a bank account in the name of the non-resident landlord. The tenant is then required to make a return and pay to Revenue the tax that he or she has deducted from the rent. The landlord is entitled to a credit for the tax deducted by the tenant against his or her final rental income tax liability and is obliged to pay any additional tax that may be due.

The tenant is not responsible for discharging the landlord's liability to tax on rental income. Instead, the withholding of tax on rental income by tenants of non-resident landlords is primarily a control measure. It is designed to promote greater compliance in this area having regard to the obvious risk factors associated with non-resident taxpayers. Where it applies, it provides in a very direct manner, valuable information for Revenue which might otherwise be difficult to obtain.

Where rent is paid to an Irish agent of a non-resident landlord, such as an Irish-based estate agent acting on behalf of the non-resident landlord, the tenant is not required to deduct income tax from the rent payable. In such cases, the non-resident landlord is chargeable to tax in the name of the Irish agent.

In the case of residential lettings, tenants may not be aware of their obligation to deduct tax. This can occur either because the tenants are unaware that the landlord is resident abroad or because the tenants are unaware of the obligation to deduct tax when making payment to such a landlord. Where a tenant claims not to have been aware of the obligation to deduct tax, the matter should be referred to the Regional Director before any assessment is made on the tenant. The tenant should be asked to provide the following details as regards the landlord:

Name and address;

Details of the bank account into which rent is paid (name and address of the bank and the account number into which the payments are made);

Details of the rents paid to the non-resident landlord for all years for which the landlord was resident abroad.

An assessment can be entered on the landlord, at his or her foreign address, and where necessary powers of attachment under section 1002 of the Taxes Consolidation Act 1997 can be used to enforce collection of the tax due. The tenant should be advised to deduct tax from all future payments to the landlord.

Where a claim for rent allowance is received in respect of rent and there are indications that the landlord is resident abroad, the tenant should be advised of the obligation to deduct tax from payments direct to the landlord, including payments into a bank account of the landlord. Where the tenant claims to have been unaware of the obligation to deduct tax, any allowance for rent paid by the tenant need not be restricted where the tenant has provided the information relating to the landlord, mentioned above. The question of assessing the tenant in respect of tax which should have been deducted from rents should be referred to the Regional Director.

I am advised that the policies and procedures relating to the deduction of tax on rent payable to non-residents have been set out in the Revenue publication "Tax Briefing 42" and that these policies and procedures are being kept under review.