Kevin Humphreys (Dublin South East, Labour)
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To ask the Minister for Finance if he will outline each age exemption limit that exists within the income tax system and the estimated cost to the Exchequer of each of these exemptions in a full tax year; and if he will make a statement on the matter. [38720/12]

Michael Noonan (Limerick City, Fine Gael)
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The position is that section 188 of the Taxes Consolidation Act 1997 provides for exemption limits for individuals aged 65 or over. For married individuals or civil partners, where either spouse or civil partner is aged 65 or over at any time during the tax year, the exemption limit is €36,000. In the case of single persons, widowed persons, and married persons or civil partners assessed as single persons, who at any time during the tax year are aged 65 or over, the exemption limit is €18,000. In addition, these exemption limits are increased by €575 in respect of each of the first 2 qualifying children and by €830 in respect of each subsequent qualifying child.

The section also provides for marginal relief where an individual’s total income exceeds the exemption limit applicable to that individual, but does not exceed a sum equal to twice that limit. Where marginal relief applies, the individual is taxed at 40% on all income above the exemption limits to a ceiling of twice the exemption limit. Once the income exceeds twice the exemption limit, marginal relief is no longer available and the individual pays tax under the normal tax system. It should be noted, however, that where the individual’s income is greater than the exemption limit but below twice that limit, the taxpayer is always given the benefit of the more favourable treatment between the use of marginal relief or the normal tax system. Exemption limits for persons aged less that 65 years ceased to apply with effect from 1 January 2008.

Deposit Interest Retention Tax (DIRT) is deducted at the source from interest paid on most deposits held by Financial Institutions such as Banks, Building Societies, the Post Office Savings Bank and Credit Unions. Where an individual, or an individual’s spouse or civil partner, is aged 65 or over during the tax year and, the indivdual’s income (or the joint income of the individual and his or her spouse or civil partner) is below the relevant annual exemption limit then he or she can apply directly to the financial institution concerned to have the interest paid without deduction of DIRT. Further information on all tax credits, reliefs and exemptions for over 65s is available from the Revenue website at the following link:

I am advised by the Revenue Commissioners that the full year cost of the age exemption limits and the associated marginal relief, estimated by reference 2012 incomes, is provisionally estimated at €87 million. This is an estimate from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. It is therefore provisional and likely to be revised.

I am also advised by the Revenue Commissioners that sufficiently detailed figures are not captured on the statutory return of Deposit Interest Retention Tax (DIRT) filed by financial institutions in such a way as to provide a basis for compiling estimates of the impact on the Exchequer from the DIRT exemption.