Written answers

Tuesday, 19 January 2010

9:00 pm

Photo of Michael CreedMichael Creed (Cork North West, Fine Gael)
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Question 247: To ask the Minister for Finance if he will review the impact of tax individualisation on a married couple, when one of the partners, due to a personal disability is not in a position to take up employment opportunities outside the house; his views on introducing some specific tax relief for persons in these circumstances; and if he will make a statement on the matter. [48621/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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As stated in my reply to Parliamentary Question No 81 of 17 December 2009, the position is that a married one income couple benefit from a standard rate band of €45,400 which is €9,000 higher than the band for a single person. They also have the benefit of the married person's credit in the amount of €3,660, which is double the single person's credit. Where the stay-at-home spouse in a married one earner couple cares for a dependent person, e.g. their child or an elderly relative, the couple may benefit from an entitlement to the home carer tax credit, which has a value of €900.

The Commission on Taxation considered the issues associated with tax individualisation in its 2009 report. The Commission concluded that the present arrangements with regard to band structure and credits which apply to married one-earner and married two-earner couples should remain in place.

With regard to the question of introducing a specific tax relief for persons in the circumstances outlined by the Deputy, the position is that tax relief provisions are reviewed regularly, particularly as part of the annual Budget and Finance Bill process.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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Question 248: To ask the Minister for Finance if he will respond to the suggestion made in correspondence (details supplied) in relation to the administration of the research and development tax credit. [48642/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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A tax credit of 25% of the incremental expenditure incurred by a company in an accounting period on Research and Development (R&D) activities can be offset against a company's corporation tax liability. Finance (No.2) Act 2008 contained a number of very significant enhancements to the R&D tax credit scheme including: an option to carry-back unused tax credits for set-off against a company's previous year's corporation tax payments, if there is insufficient corporate tax liability in the current year, thereby creating a tax refund; a further option, if unused tax credits still remain, to claim payment of the remaining unused credits which will be paid in instalments over a 3 year period.

Other positive changes made to the scheme in Budget 2009 and Finance (No. 2) Act 2008 include an increase in the rate of tax credit from 20% to 25% and the permanent setting of 2003 as the base year under the scheme. The scheme has been improved in most Budgets and Finance Acts since its introduction and the latest enhancements introduced in Budget 2009 and Finance (No 2) Act 2008 will act to make the scheme one of the most competitive of its kind anywhere.

There are difficulties in allowing companies to offset the R&D tax credit against payroll taxes, not least the fact that these taxes are paid over to the Exchequer by companies on behalf of their employees on a fiduciary basis. Given the significant improvements already made to the scheme, notwithstanding the current difficult economic and fiscal environment which we face, I regret that I am not in a position at this time to agree to the suggestion contained in the details supplied with the question.

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