Brian O'Shea (Waterford, Labour)
Link to this: Individually | In context

Question 90: To ask the Minister for Finance his proposals to end the practice whereby the income levy is deducted from the income of couples who are under the €40,000 income threshold but will be refunded at the end of the year; and if he will make a statement on the matter. [17287/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The position is that section 531K(3) of the Taxes Consolidation Act 1997 provides for any income levy deducted from the income of a married person, jointly assessed for tax, where one or both persons are aged 65 years or over, to be repaid after the end of the tax year where the aggregate income of both spouses for the year does not exceed €40,000.

The legislation provides for a refund after the end of the year because it would not be possible for the Revenue Commissioners, an employer or pension provider to know during the course of the year whether or not all of the requirements necessary for the exemption to apply have been met. This would include knowing, for example, if the person or their spouse had turned 65 in the tax year, if they had other income sources and the aggregate income from these sources, if there had been a change in employment circumstances or if there had been a change in marital status during the year.

Revenue would not be in a position to establish many of these matters until after the end of a tax year and hence the need for the legislation to provide for the exemption to apply on the basis of a person making a repayment claim after the end of the tax year. I understand that in the case of the personal exemption of €20,000, the Revenue Commissioners have, on an administrative basis, advised employers and pension providers that they may apply the personal exemption of €20,000 during the course of the year for those persons aged 65 years and over, irrespective of marital status, where it is clear that the person's income for the year from that employment or pension will not exceed €20,000. Where it emerges after the end of the year that this arrangement results in an underpayment of the levy Revenue will pursue recovery of the levy underpaid.