Michael McGrath (Cork South Central, Fianna Fail)
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Question 125: To ask the Minister for Finance the position regarding an application for an incapacitated child tax credit in respect of a person (details supplied) in County Cork. [27874/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am advised by the Revenue Commissioners that following receipt of medical reports to support the claim for an incapacitated child tax credit, an amended Tax Credit Certificate for the year 1 January 2010 to 31 December 2010 was issued by Revenue to the taxpayer on 24 June 2010. This Tax Credit Certificate includes an incapacitated child tax credit.

Noel Ahern (Dublin North West, Fianna Fail)
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Question 126: To ask the Minister for Finance further to the almost €70 million distributed to a company's (details supplied) employees share ownership plan in the past year, the reason same has been allowed tax free; the legislation under which this will take place; and if such provisions can be altered. [28092/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Revenue Commissioners are obliged to observe confidentiality for taxpayers and thus they are precluded from providing any information specific to the company involved.

Legislation governing Employee Share Ownership Trusts (ESOT) is contained in Section 519 and Schedule 12 to the Taxes Consolidation Act 1997. A company must apply to the Revenue Commissioners if they wish to operate such an ESOT. The Revenue Commissioners will only approve the ESOT where all the necessary conditions specified in the legislation are complied with.

All the ESOTs approved by the Revenue Commissioners to date work in conjunction with an Approved Profit Sharing Scheme (APSS) under which eligible employees may receive shares free of income tax. The legislation governing APSSs is contained in Chapter 1 of Part 17 and Schedule 11 to the Taxes Consolidation Act 1997. As in the case of an ESOT, the Revenue Commissioners will only approve an APSS where all the necessary conditions specified in the legislation are complied with.

Where the trustees of an approved ESOT transfer shares to the trustees of an APSS for distribution to eligible employees, the employees may receive shares free of income tax to the value of up to €12,700 per annum. To receive the shares free of income tax they must have been held for a period of not less than 3 years. The time the shares are held in the ESOT is included for the purpose of this three-year period. In certain limited circumstances, and on a one-off basis only, shares to the value of €38,100 may be received free of income tax. The same three-year retention period is required.

ESOTs and APSSs are employee financial participation schemes and the tax relief provided for such schemes is given with a view to fostering partnership at the level of the enterprise. In its recent review of the tax system, the Commission on Taxation recommended that the above schemes be continued.

The provisions governing ESOTs and APSSs can, of course, be altered by the Oireachtas.

Noel Ahern (Dublin North West, Fianna Fail)
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Question 127: To ask the Minister for Finance the position regarding property tax reliefs; if they can be listed individually; the total tax relief claimed under each of any recent tax year; if there is a time limit under which a property tax relief can be claimed or if it is open ended; if, in view of the fact that the relief being claimed is available, if he will outline the potential for what can be claimed in terms of IOU's available or potentials; the number of individual property tax reliefs claimed per year; and if an owner of second hand properties with a tax relief status can continue the claim potential on them. [28100/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that the relevant information available on the number of taxpayers, including individuals and companies, who made claims under the following schemes is based on personal income tax returns filed by non-PAYE taxpayers and corporation tax returns filed by companies for the years 2007 and 2008. These are set out in the following table:

Number of Taxpayers

The information available on the numbers of claimants is based on personal income tax returns filed by non-PAYE taxpayers (Form 11) and corporation tax returns filed by companies for the years 2007 and 2008, the latest year for which this information is available.

It should be noted that any corresponding data returned by PAYE taxpayers in the income tax return (Form 12) is not captured in the Revenue computer system. However, any PAYE taxpayer with non-PAYE income greater than €3,174 is required to complete an income tax return (Form 11).

The estimated relief claimed has assumed tax forgone at the 41% rate for 2007 and 2008 in the case of individuals and 12.5% in the case of companies for both years. The figures shown correspond to the maximum Exchequer cost in terms of income tax and corporation tax.

The figures for 2008 are subject to adjustment in the event of late returns being filed or where returns already filed are subsequently amended.

I have also been given information by the Revenue Commissioners in relation to when a building can qualify for allowances. This depends on the particular scheme or type of building. In general, buildings that are to be used for commercial purposes in the various area-based schemes, such as the Urban Renewal Scheme, can qualify for allowances in a number of ways. In the case of an initial allowance (i.e. an accelerated up-front allowance), the allowance is given for the chargeable period in which the expenditure is incurred or, in the case of a lease, the chargeable period in which the tenancy commences. Annual allowances are given when the building is in use for the purposes of a trade or profession or, in the case of a lease, when the building has been let on bona fide, arm's length commercial terms. Thus, it is not necessary in all cases that the building be occupied for a specific purpose before allowances are given.

In general, in the case of the sectoral schemes, such as hotels, nursing homes and hospitals, the building has to be in use for a specific purpose before allowances are given. This is the case whether the building is occupied by an owner-operator or is leased. However, in the case of residential units associated with registered nursing homes, the allowances can be claimed when the units have been leased to the nursing home for onward leasing to the elderly or infirm tenants.

In the case of residential buildings, 'section 23' type relief and the relief under the Countrywide Refurbishment scheme are given when the building has been leased, while owner-occupier relief is given when the building is occupied by the owner of the building.

The Revenue Commissioners have provided me with the information requested by the Deputy in relation to property tax relief. The information is presented in tabular format. Because there are significant differences in the operation of tax relief between the commercial and residential schemes separate tables have been used in relation to the 'non-cost' elements of the schemes.

· Table 1 contains the commercial schemes,

· Table 2 contains the residential schemes, and

· Table 3 contains composite figures for both commercial and residential relief in relation to the cost of the schemes to the Exchequer.

The Commissioners have also made some general points that should be noted when interpreting the tables.

The termination dates are the dates by which the construction or refurbishment work on a building has to be carried out if the expenditure that is attributable to that work is to qualify for tax relief. Where a building is not completed by the termination date the expenditure attributable to any construction or refurbishment work that takes place after this date cannot qualify for tax relief. There are no set dates by which a person has to acquire a tax incentive property in order for tax relief to start to be claimed. Tax relief can only start to be claimed after a building has been completed and the building leased or owner-occupied for the purposes required by the particular scheme. Once a building has been leased or owner-occupied and is in use for the required purpose, tax relief can be claimed over varying periods. In addition, the rate at which the available tax relief can be used up depends on the particular taxpayer having sufficient taxable income in any year to absorb the relief. Any unused relief (with the exception of that for residential owner-occupier relief) can be carried forward indefinitely until it has been absorbed. Thus, it is not possible to provide an indication of the final year in which tax relief under these schemes will be claimed as the start year for relief can vary from building to building and the relief period applicable likewise can vary within some of the schemes and between different taxpayers.

At this stage the only scheme that is still open to new entrants is the Mid-Shannon Corridor Tourism Infrastructure Scheme. New entrants have until 31 May 2012 to submit project applications for approval in principle. Expenditure on approved projects under this scheme that is incurred before 31 May 2015 can qualify for capital allowances. The scheme for Specialist Palliative Care Units has not yet been commenced. When the Commencement Order is made, the commencement date will be made retrospective to 13 March 2008.

Notes to Table 1

1) The termination date is the date by which qualifying construction/refurbishment expenditure must be incurred, not the date by which a building must be completed/sold or relief claimed.

2) Free depreciation (i.e. the ability to claim more than the basic annual rate of allowances for a single year or over a period of years) is available to owner/occupiers but not to lessors.

3) Under the 1994 Urban Renewal Scheme a maximum of 50% of qualifying expenditure incurred on commercial projects could be written off. The annual allowance for such projects was 2% per annum.

4) Under the Temple Bar Area scheme the emphasis was on refurbishment rather than construction. Refurbishment projects in general qualified for 100% write off of the capital expenditure incurred at the higher 4% rate of annual allowance. For most types of construction projects, only 50% of the qualifying expenditure could be written off at the lower 2% rate.

5) As per note 4, there were different rates for construction and refurbishment projects and for different types of projects.

6) As per note 4, there were different rates for construction and refurbishment projects and for different types of projects.

7) Under the Enterprise Area scheme lessors could claim capital allowances on 100% of qualifying expenditure at a rate of 25% initial allowance and 4% annual allowance.

8) Double Rent Deduction was not available for buildings in Enterprise Areas located at an airport.

9) The Initial Allowance was increased to 50% in the case of expenditure incurred from 1 January 1998 on a qualifying building located in an Airport Enterprise Area.

10) For Multi Storey Car Parks the annual allowance of 4%, free depreciation of 100% and initial allowance of 50% applied to expenditure incurred after 31/7/1998 where no lease had been granted for the purposes of double rent relief. For expenditure incurred prior to this date the capital allowances available were restricted to a maximum 50% write-off of the capital expenditure incurred. Under these circumstances an annual allowance of 2%, free depreciation of 50% and an initial allowance of 25% applied.

11) For Multi Storey Car Parks the latest date for entering into a qualifying lease for the purposes of double rent deduction was 30/09/1999.

12) Capital allowances for expenditure incurred on hotel projects are of long standing and different rates have applied over time. From 1956 to 27/1/1994 the annual allowance was 10%. From 28/1/1994 to 31/7/2008 the rate was 15% for the first 6 years and 10% in year 7. From 1/8/2008, subject to transitional arrangements, the annual allowance is 4%, giving a current write-off period of 25 years.

13) The accelerated allowances for Childcare Buildings are available in respect of expenditure incurred from 1 December 1999.

14) See Note 13.

15) This scheme has not yet been commenced. When the Commencement Order is made, the commencement date will be made retrospective to 13/3/2008.

16) Expenditure incurred on registered holiday camps after 31/7/2008 is written off at a rate of 4% per annum. For expenditure incurred prior to 27/1/1994 an annual allowance of 10% applied.

Notes to Table 2

1) There are two types of residential tax relief, 'section 23' type relief and owner-occupier relief. 'Section 23' type relief (rented residential relief) is given, in its entirety, as a deduction from rental income in the year the property is first let under a qualifying lease. If there is insufficient income to absorb the relief it is carried forward as a rental loss until used up. Therefore, there is no standard writing off period – it could vary from 1 year to indefinitely as it depends on the ability of the investor to absorb the relief. In contrast, owner-occupier relief is granted at a fixed annual rate over 10 years, i.e. at 5% of the qualifying expenditure in respect of expenditure on construction or at 10% in respect of expenditure on refurbishment.

2) 1/6/1998 for 'section 23' type relief and 6/4/1999 for owner/occupier relief.

3) ' Section 23' type relief only.

4) Relief is available under the Countrywide Refurbishment Scheme in respect of rented residential property that is located anywhere in the country. Unlike 'section 23' type relief for designated areas, the qualifying expenditure is written off at a rate of 15% per annum in the first 6 years and 10% in year 7.

Notes to Table 3

1) The information available on the cost to the Exchequer is based on personal income tax returns filed by non-PAYE taxpayers (Form 11) and corporation tax returns filed by companies for the years 2007 and 2008, the latest year for which this information is available. Data for 2009 cannot be provided as the tax returns for this year are yet due.

It should be noted that any corresponding data returned by PAYE taxpayers in the income tax return (Form 12) is not captured in the Revenue computer system. However, any PAYE taxpayer with non-PAYE income greater than €3,174 is required to complete an income tax return (Form 11). 2) The estimated relief claimed has assumed tax forgone at the 41% rate for 2007 and 2008 in the case of individuals and 12.5% in the case of companies for both years. The figures shown correspond to the maximum Exchequer cost in terms of income tax and corporation tax. 3) The figures for 2008 are subject to adjustment in the event of late returns being filed or where returns already filed are subsequently amended.

Noel Ahern (Dublin North West, Fianna Fail)
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Question 128: To ask the Minister for Finance the various tax relief schemes currently in operation, be they property related, business, film or other; the estimate of the relief claimed in 2009; the estimate for 2010; and if he will make a statement on the matter. [28101/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am advised by the Revenue Commissioners that the total identifiable costs to the Exchequer of all income tax and corporation tax allowances, reliefs, exemptions and tax credits available, are set out in the following tables for 2006, the most recent year for which the necessary detailed historical information is available. Relevant notes relating to items in the tables are also included. COST OF TAX CREDITS, ALLOWANCES AND RELIEFS 2006 AND 2005 The following table IT 6 shows the estimated cost in terms of revenue forgone of the personal tax credits and the main reliefs and deductions allowable under the income tax system. A number of reliefs which apply both to individuals and companies is also included and the cost shown in relation to these reliefs covers income tax and corporation tax.

An adjustment is included in the cost figures applying to income tax to compensate for incomplete numbers of tax returns on record at the time of compiling the estimates.

The tax credits and reliefs listed in the table serve varying purposes. Many are essentially structural reliefs through which individual tax liabilities are adjusted to reflect relative taxable capacity. The main personal tax credits are a good example of this since they may be regarded as part of the progressive income tax structure representing a band of income chargeable at a zero rate. Others, such as relief for interest paid in full or investment in corporate trades, are tax-based incentives in favour of specific groups or activities which are designed to promote certain aspects of public policy.

In computing taxable profits, account needs to be taken in some way of the depreciation of capital assets incurred in earning those profits. To this extent, the figures in the table of the "costs" of capital allowances should not be regarded as measuring a "loss of tax revenue" on profits. To compute such "loss", regard would have to be had to the excess of the amount of the capital allowances at current rates over the amount of the normal allowances.

The figures shown for the basic personal tax credits (married, single and widowed) are the costs of these tax credits as if all other tax credits and the exemption limits did not apply. They do not include individuals who are not on Revenue records because their incomes are below the income tax thresholds. The cost figures for the exemption limits are based on the excess of the exemption limits over the basic personal tax credits.

The figures of cost are for 2006 and 2005 and all figures are based on tax due in respect of assessments for each year and not on tax receipts within that year.

The figure against each credit or allowance represents the additional tax which would become payable if the tax credit or allowance were withdrawn assuming no consequent change in the behaviour of taxpayers (for example, in relation to the reliefs for savings), or the amounts of payments (for example, interest payable on certain savings schemes might need adjustment to take account of the new tax liability).

The numbers of claimants of each credit or relief are shown for both years to the extent that they are available. The numbers included are the taxpayers who would be adversely affected by the withdrawal of the respective credit or relief.

In the calculations, each tax credit or allowance has been dealt with separately and on the assumption that the rest of the tax system remained unchanged. It would be therefore inaccurate to calculate the effect of withdrawing all the credits, reliefs and allowances by simply totalling the figures. For example, the costs shown for capital allowances and stock relief are also calculated on the basis of separate withdrawal of these reliefs. Their combined cost would be greater than the sum of the separate costs because allowances are not always fully set off against available profits. For instance, a person with €1,000 gross trading profits, €1,000 capital allowances and €1,000 stock relief would pay no tax if either of the reliefs were withdrawn but would pay tax on €1,000 profits if both reliefs were withdrawn. In this case, the cost of each relief separately is nil but the combined cost is tax on €1,000. Basic data is not available to enable an estimate of the combined cost of these reliefs to be made.

The figures for estimates based on tax returns 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.

Finally, the estimates shown in many cases are tentative and are subject to revision in the light of later information. Some of the cost figures included in the table for 2005 reflect revisions to figures previously published in the 2007 Report.

NOTES ON TABLE IT 6

(1) Figures accompanied by an asterisk * are particularly tentative and subject to a considerable margin of error.

(2) The cost figures for the exemption limits are based on the excess of the exemption limits over the basic personal tax credits. They include the cost of marginal relief for taxpayers whose incomes are not greatly in excess of the exemption limits.

(3) The figures shown for the basic personal tax credits (married, single and widowed) are the costs of these tax credits as if all other tax credits and the exemption limits did not apply. They do not include individuals who are not on Revenue records because their incomes are below the income tax thresholds.

(4) Arising from the change over to Tax Relief at Source the figures relate to the number of policies issued. These include policies where subscriptions were paid by businesses on behalf of their employees.

(5) Part of the cost of contributions to Permanent Health Benefit Schemes is not identifiable as a result of the move to a "net pay" basis for contributions by PAYE taxpayers from 6 April 2001.

(6) See the following table "Green Paper on Pensions" for background commentary and cost figures for 2007.

(7) Arising from the work on the "Green Paper on Pensions" (2007) the basis for costing this item was changed for 2005 and is not directly comparable with the figures for earlier years. See also the following table "Green Paper on Pensions" for more recent figures.

(8) "Other" relates to borrowings for purposes such as acquiring an interest in a company or partnership or to pay death duties.

(9) The cost of exempting the income of charities, colleges, hospitals, schools, friendly societies, etc. from income tax includes the sums repaid in respect of tax credits, income tax deducted at source (certain dividends, other investment income and payments received under covenant), and also includes tax on (see Note 10) (a) donations made by the PAYE and self-employed sectors to approved bodies (b) income tax repayments on foot of PAYE donations. It also includes the cost of exempting certain bodies from the deduction on income arising from government securities. Information is not available about other income received gross.

(10) The cost figures for relief for donations to Approved Sports Bodies and for certain Sports Persons are based on self assessment returns.

(11) In the absence of other information, tax has been assumed at the standard rate of income tax even though a different rate might be appropriate in many cases.

(12) The costs included for corporation tax are by reference to accounting periods which ended in the years 2005 and 2006.

(13) The cost shown for capital allowances does not include any cost associated with "unused capital allowances", that is, capital allowances which are not absorbed by a company in the accounting period in which they arise because they exceed the amount of the company's profits of that accounting period which are available for offset. Unused capital allowances can be offset as losses against taxable profits arising in the previous accounting period and against certain profits arising in future accounting periods and can be offset against the profits of another company in the same group of companies. It is estimated that €3340 million of unused capital allowances were claimed in respect of 2006 accounting periods but as the proportion of this item which is included in previous years losses and in group relief is not separately identifiable a reliable estimate of the cost of the capital allowance element cannot be provided.

(14) The tax cost shown for section 23 type relief is the estimated ultimate tax cost relating to the total allowable expenditure in respect of claims made in 2005 and 2006 tax returns for the first time. The cost shown is for income tax cases only.

(15) The cost does not include any notional cost associated with IFSC companies. The International Financial Services activity in Ireland represents new business which has developed as a result of, among other things, the concessionary tax rate. This means that as the cost of the concessionary rate is not just the difference between the concessionary tax rate and the full tax rate, it is therefore not quantifiable. In regard to the cost shown for the effective rate of 10 per cent for manufacturing and certain other activities, no account is taken of the fact that without these incentives, many enterprises may not have set up here. To the extent that profits earned by such enterprises would not have been available for Irish tax purposes, part of the cost figure shown might be regarded as notional.

(16) The costs shown for R&D is for claims for R&D on corporation tax returns for accounting periods ending in 2005 and 2006. However, the cost includes the cost associated with claims where the company was entitled to the credit but was unable to absorb it in that accounting year.

Green Paper on Pensions – updated estimates of cost for 2007

As part of the work on the Green Paper on Pensions, a review was carried out of the current regime of incentives for supplementary pension provision with a view to developing more comprehensive and reliable estimates of the cost of reliefs in this area. The review examined, among other things, the current reliefs and incentives for investment in supplementary pensions and the data available on which to base reliable estimates of the costs in revenue foregone to the Exchequer.

The review drew on newly available 2007 aggregate data on contributions to pension schemes by employers and employees arising from a P35 initiative introduced on foot of provisions that were included in Finance Act 2004 with a view to improving data quality. Estimates of the cost of tax for private pension provision updated for 2007 are included in the table below.

Estimate of the cost of tax and PRSI reliefs for private pension provision 2007.