Paul Kehoe (Wexford, Fine Gael)
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Question 244: To ask the Minister for Finance the way a situation could arise with regard to relevant contracts tax in which the son of a builder would have to register as a principal contractor and implement RCT on his sub-contractors, if he decided to have a warehouse built on his land for leasing, despite the fact that his business occupation would be a farmer; his views on whether the explanation given by the Revenue Commissioners that he would be connected with someone who was involved in the building trade is a fair assessment; his further views on whether it is discriminatory against family members; and if he will make a statement on the matter. [1041/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that under the legislation governing the operation of Relevant Contracts Tax (RCT) the general position is that the obligation to operate RCT is placed on the principal contractor under the construction contract. A principal contractor must operate RCT on payments to subcontractors not only where the construction work being carried out relates to a third party construction project but also in a situation where the construction work is carried out on the principal contractor's private residence.

I am also informed by the Revenue Commissioners that the son of a builder would not have to register as a principal contractor and implement RCT solely because he was related to a person who was involved in the construction industry. However, section 531(1)(c) of the Taxes Consolidation Act, 1997 requires the operation of RCT where a person who is connected with a company carrying on a construction business undertakes construction operations. Therefore, a builder's son would only be obliged to register as a principal contractor and operate RCT in connection with the building of a warehouse on his land, if he (that is, the son) was connected with a construction company. In this context, "connected" requires the son or the son and persons connected with him (e.g. his father) to have a controlling interest in the construction company. This rule would not operate if the father's construction operation is unincorporated.

There is no discriminatory treatment in the RCT legislation against family members of those engaged in the construction industry. Indeed, the legislation is carefully worded to ensure that any such discrimination is avoided by ensuring that a connection created by a family relationship is, in itself, not sufficient to bring a person within the RCT provisions.

Joan Burton (Dublin West, Labour)
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Question 245: To ask the Minister for Finance the tax treatment of income receivable from the letting of self catering accommodation; the way and the reason this is different from the treatment of income from a hotel or bed and breakfast business; his views on whether there is an anomaly in the treatment of such income; if he has plans to amend the treatment of such income for tax purposes; the representations made by the Self Catering Federation of Ireland with respect to the treatment of income from self catering accommodation; and if he will make a statement on the matter. [1047/09]

Richard Bruton (Dublin North Central, Fine Gael)
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Question 287: To ask the Minister for Finance if his attention has been drawn to the fact that under tax rules, income from a self-catering holiday enterprise is not deemed as trading income and losses on such activities cannot be offset against profits in other trading activities; and his views on amending this provision in order that the self-catering business could be treated in a similar way to hotel or bed and breakfast business in which such transfer of losses is possible. [1724/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 245 and 287 together.

I am informed by the Revenue Commissioners that the Tax Acts apply different rules to the computation of taxable income depending on the source of the income. The income receivable from the letting of premises such as self-catering accommodation is regarded as rental income and assessed accordingly. Income from the operation of hotels and bed and breakfast establishments is regarded as trading income and different rules apply to the assessment of such income. While the computation of the tax liability is broadly similar for both types of income, there are some differences. For example, in a rental situation where expenses exceed rents, the loss can only be used to reduce taxable rental income in years subsequent to that in which the loss arises whereas trading losses can be used to reduce other non-trading taxable income in the same year as that in which the loss arises, but can only be used to reduce taxable income from the same trade where it continues to be carried on in subsequent years.

I would also point out that the less favourable treatment of rental losses as against trading losses also applies to other non-trading losses such as losses arising from the disposal of capital assets or losses arising from the exploitation of certain intellectual property.

I am also informed by the Revenue Commissioners that there is no anomaly in the different treatment of both types of income. Rather, there is a long-standing legislative distinction in the tax code between exploiting the rights of ownership of land and property to generate investment (e.g. rental) income and the carrying on of a trade or profession. Over time various court cases have established the principle that income derived from rights over property is very unlikely to be trading income.

Leo Varadkar (Dublin West, Fine Gael)
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Question 246: To ask the Minister for Finance the reason income earned in 2008, but not paid until 2009 was subject to the income levy (details supplied); and if he will make a statement on the matter. [1053/09]

Róisín Shortall (Dublin North West, Labour)
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Question 248: To ask the Minister for Finance the reason the new income tax levy was applied on 1 January 2009 to incomes earned from the previous tax year of 2008. [1070/09]

Richard Bruton (Dublin North Central, Fine Gael)
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Question 250: To ask the Minister for Finance if he will clarify whether employees who are paid in arrears and where their January 2009 pay cheque covers work carried out in December 2008 will have to pay the new income levy on these earnings from December 2008. [1093/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 246, 248 and 250 together.

The position is that, on the basis of the legislation as enacted, the employer is legally obliged to deduct income levy from all payments of emoluments (which would include salary, bonus payments and other payments in the nature of pay) made to his or her employees where payment of those emoluments takes place on any date on or after 1 January 2009 irrespective of the period to which the payments relate.

PAYE income tax, Pay Related Social Insurance Contributions and Health Contributions are all similarly deducted on arrears of pay, bonuses, and other payments in the nature of pay at the rates in force at the date of payment, notwithstanding that the payments relate to a year other than that in which the payment is made. The income levies introduced in the Finance Acts 1983 and 1993 operated on the same basis.

Richard Bruton (Dublin North Central, Fine Gael)
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Question 247: To ask the Minister for Finance if DIRT tax is deductible by banks on deposits made by credit unions; if records are kept which would distinguish the amount which was paid in DIRT on such deposits by each of the banks; and if he is satisfied that all banks appropriately deduct the tax due. [1056/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that interest arising on deposits made by Credit Unions with banks is not subject to Deposit Interest Retention Tax. Credit Unions, being themselves "relevant deposit takers" (under Section 256 of the Taxes Consolidation Act 1997) who operate DIRT, are not subject to the DIRT provisions on the interest arising on their deposits with banks or other relevant deposit takers. Accordingly the question of separate records, which would distinguish an amount that would have been paid in DIRT on such Credit Union deposits by each of the banks, does not arise.