Michael Healy-Rae (Kerry South, Independent)
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188. To ask the Minister for Finance further to the recent announcements that grandparents looking after their grandchildren will have to fill up forms, if he will outline his proposed plans; the reason it is being proposed; and if he will make a statement on the matter. [13954/14]

Michael Noonan (Limerick City, Fine Gael)
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I assume the Deputy is referring to recent reporting in the media about the taxation of income from the provision of childcare services.  I am advised by the Revenue Commissioners that, regrettably, there has been significant mis-reporting about the tax obligations of childminders. 

At the outset, I must stress that there has been no change at all in the requirements for anyone providing childcare services, whether they are grandparents looking after their grandchildren or any other person providing the service. 

An exemption from tax for certain providers of childcare services was introduced in 2006.  This exemption was a positive measure, aimed at smaller providers of childcare services.

I am advised that, as they do on a regular basis, the Revenue Commissioners recently issued a briefing note to remind tax practitioners and others of the need for childcare providers to notify Revenue each year of their claim for exemption from tax in respect of income from the provision of childcare services, provided they meet certain conditions.

Individuals in receipt of income from childcare services are, in general, chargeable persons. However they can claim an exemption from income tax and USC, provided:

- the gross amount of childcare income does not exceed €15,000 in the year,

- they are minding not more than 3 children, and

- the children are looked after in the home of the childminder.

They must also notify the relevant childcare authorities each year that they are providing childcare services in their home.

While the childcare income is exempt from income tax and USC, PRSI is chargeable. However PRSI does not apply where:

- the provider of the childcare is over 66 years of age; or

- the provider is under 66 and the person's only income source is childcare income which is less than €5,000 per annum.

 Therefore, in the case of grandparents providing the childcare, once they are over 66 and meet the conditions of the exemption, they will have no liability to tax, USC or PRSI.

For those individuals under 66 and earning over €5,000, it is in their interest to claim the childcare exemption. By making the exemption claim and returning the income they are ensuring that their liability is to PRSI only and  the payment of the PRSI will go towards maintaining their entitlement to the following Department of Social Protection benefits:

- State Pension (Contributory)

- Widow's and Widower's (Contributory) Pension

- Guardian's Payment (Contributory)

- Maternity Benefit

- Adoptive Benefit.

 Regarding the process of making the claim for exemption, I am advised that, again it has been incorrectly reported that a person must complete a 26-page form in order to get the exemption.  This is not the case and the exemption can be easily claimed on the Form 11S, which is a short, six-page form, or by going online and claiming.

It is most unfortunate that the incorrect reporting of what was essentially a notification to people to remind them to claim an exemption from tax and USC has caused confusion in the minds of taxpayers but I am happy to correct the record and clarify matters.