Joan Burton (Dublin West, Labour)
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Question 55: To ask the Minister for Finance the estimated tax loss prevented by the introduction of Section 118B, Taxes Consolidation Act 1997, via section 21, Finance Act 2008; the main areas of avoidance giving rise to introduction to the section; the State and semi-State bodies involved in tax avoidance schemes prior to the introduction of the section; and if he will make a statement on the matter. [26396/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that section 21 of the Finance Act 2008 clarified the tax treatment of what are known as "salary sacrifice" arrangements. These arrangements, which are in reality an application of a person's remuneration, consist of benefits being purchased or provided by an employer with the employee effectively paying for the benefits by means of a reduction in remuneration. Section 21 also placed on a legislative basis two long-standing administrative concessions that operated in this area, namely, for:

Travel passes given by an employer to an employee where the cost of the travel pass provided by the employer is matched by a corresponding reduction in the employee's remuneration and

a contribution by an employer to a Revenue approved profit sharing scheme where the contribution or part of the contribution by the employer is matched by a corresponding reduction in the employee's remuneration.

In both cases, the new legislation ensures that a tax charge does not arise on that part of an employee's remuneration used to buy the travel pass or to fund the profit sharing scheme.

In all other cases of salary sacrifice, the legislation copper-fastens the Revenue view that such schemes are ineffective for tax purposes and do not operate to reduce an employee's taxable income. This position was outlined in an article in Tax Briefing 41, dated September 2000 which is available on www.revenue.ie.

Over the last year or so, Revenue have become aware of a number of salary sacrifice arrangements, which as part of their motivation sought to reduce the taxable income of employees and thereby avoid PAYE, and employers and employees PRSI. While, as already stated, Revenue dispute the effectiveness of such arrangements, the opportunity to copper-fasten this view was taken in the Finance Act 2008.

Schemes in this area that have come to the attention of Revenue include:

Attempts to circumvent the limits on personal contributions to pension schemes by forgoing taxable salary and transferring the contribution from the hands of the employee to the employer by means of a reduction in salary, and

Schemes designed to provide benefits, such as company cars, club fees or childcare, with the employer being recompensed by the employee foregoing taxable remuneration.

As stated, Revenue has never accepted that these schemes are effective for tax purposes and as such it is not possible to say what, if any, tax loss may have arisen in this area. As such schemes are discovered, on audit or otherwise, they will be challenged and any tax found due will be recovered, together with interest and penalties, if appropriate. If, as part of any settlement, any such case falls to be published in accordance with the terms of section 1086 (publication of names of tax defaulters) of the Taxes Consolidation Act 1997 then it will be published in accordance with that section but not otherwise.

Joan Burton (Dublin West, Labour)
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Question 56: To ask the Minister for Finance the number of claims made for one parent family credit, under section 462, Taxes Consolidated Act 1997 in each year from 2000 to 2008 inclusive; if he will provide an analysis of claims made by status of the claimant, that is widow/widower, lone parent, separated parent or divorced; and if he will make a statement on the matter. [26397/08]

Joan Burton (Dublin West, Labour)
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Question 57: To ask the Minister for Finance the number of claims made for one parent family credit, under section 462, Taxes Consolidated Act 1997 in each year from 2000 to 2008 inclusive, broken down by sex of the claimant; and if he will make a statement on the matter. [26398/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 56 and 57 together.

I am informed by the Revenue Commissioners that the estimated numbers of income earners availing of the one parent family credit, under section 462, Taxes Consolidated Act 1997, broken down by personal status and by gender for the income tax years 2000/01 to 2008 inclusive are set out in the following tables to the extent to which they are available.

Figures in the tables are rounded to the nearest fifty.

The numbers availing of the credit represent income earners who were in a position to absorb at least some of the one parent family tax credit and thereby give rise to an Exchequer cost. They do not include the numbers of potential claimants whose entitlements to other tax credits were sufficient to reduce their liability to tax to nil.

The figures for the years 2000/01 to 2005 inclusive are based on incomes data derived from income tax returns held on Revenue records and have been grossed up to an overall expected level to adjust for incompleteness in the numbers of returns on record at the time the data was extracted for analytical purposes. For the years 2006 to date the figures are estimates from the Revenue tax forecasting model using actual data for the year 2005 adjusted as necessary for income growth for the years in question.

The breakdown requested in relation to separated and divorced parents either could not be obtained or could not be obtained without conducting a protracted examination of the Revenue Commissioners' records.

Joan Burton (Dublin West, Labour)
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Question 58: To ask the Minister for Finance the number of the claims made for one parent family credit, under section 462, Taxes Consolidated Act 1997 in each year from 2000 to 2008 that were audited; the proportion of the claims examined that were rejected in each year; and if he will make a statement on the matter. [26399/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am advised by the Revenue Commissioners that credit claims and requests for refunds from PAYE taxpayers are checked on a tiered basis based on value. Larger claims are subject to a higher proportion of examination as they are thought to be higher risk. I am further advised that overall, about 1% of claims for all tax credits, including One Parent Family Credit, are verified in this way. Some claims may subsequently be selected for a verification check. Where it seems from the checks carried out that the claim is not valid, the credit will be withdrawn. Results of claims checked are recorded at case level, not centrally and are not credit specific. Consequently, it is not possible to provide the information requested.

I am also advised by the Revenue Commissioners that in taking this approach to PAYE credit claims, they are applying the principles of presumption of honesty and self-assessment to PAYE workers that have worked successfully for business taxpayers since 1988. Where credits (including one parent family credit) are claimed by self-employed taxpayers, this is done on the standard return of income. These returns are all subject to audit and compliance checks in the normal way.