Written answers

Tuesday, 10 December 2013

Department of Finance

Universal Social Charge Exemptions

Photo of Gerald NashGerald Nash (Louth, Labour)
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127. To ask the Minister for Finance if he will give consideration to providing an exemption to the universal social charge in cases where medical expenses are greater than taxable income, particularly for residents of nursing homes; and if he will make a statement on the matter. [52562/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, the Universal Social Charge (USC) was introduced in Budget 2011 to replace the Income Levy and Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit. The USC is a charge on the gross income of individuals if their gross income exceeds the USC threshold of €10,036 per annum. It applies on a broad base with very few exceptions.

Section 469 of the Taxes Consolidation Act 1997 provides for tax relief in respect of health expenses in the provision of health care incurred by an individual or an individual’s spouse or civil partner, on their own behalf or on behalf of someone else. Relief is provided at the standard rate except in the case of nursing home fees which are provided at the marginal rate.

There is no relief against Universal Social Charge for health expenses. However, it should be noted that payments from the Department of Social Protection such as the State Pension are exempt from the Universal Social Charge (USC). In addition, individuals aged 70 and over, provided their total income does not exceed €60,000, are not liable to the top rate of charge and payments from the Department of Social Protection will not be taken in to account in determining if an individual has exceeded the €60,000 threshold.

The Deputy will be aware that the Nursing Home Support Scheme Act 2009 was introduced to provide financial support for people assessed as needing long-term nursing home care. The scheme is founded on the core principles that long-term care should be affordable and that a person should receive the same level of State support whether they choose a public, voluntary or private nursing home. Since the 27th October 2009, the Nursing Homes Support Scheme is the single funded means of accessing long-term nursing home care for all new entrants.

Any contribution made by an individual in defraying expenses in the nature of maintenance or treatment in a nursing home, where that individual has received State support under section 3 of the Nursing Home Support Scheme Act 2009, is treated as health expenses qualifying for relief. This relief is given at the marginal rate of tax but cannot exceed an amount which reduces the income tax liability for the year to nil. As stated previously, this compares with tax relief at the standard rate for any other health expenses. Given the additional tax relief currently available for nursing home fees I would not be in favour of providing an additional relief from USC for such fees.

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