Willie Penrose (Longford-Westmeath, Labour)
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277. To ask the Minister for Finance the level of tax credits, that is available to a person, and the level of income, that one would have to earn in excess of the tax credits before becoming liable to tax at the 41% rate; and if he will make a statement on the matter. [14221/14]

Michael Noonan (Limerick City, Fine Gael)
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The Irish tax system applies a unified system of taxation to personal income which makes no differentiation between earned income (such as pay), and unearned income (such as rents).   An individual is liable to income tax in respect of his or her income arising from all sources.  Under joint assessment the incomes of both spouses and civil partners are aggregated.  When the full income has been determined various allowances, reliefs and deductions are applied to arrive at the taxable income.

Examples of deductions allowable in arriving at taxable income include capital allowances, relief for maintenance payments to a former spouse, former civil partner, or financially dependant former cohabitant, and pension contributions relief.

This taxable income is subject to tax and only when the tax liability has been calculated will tax credits be applied to reduce the liability.

Tax is charged on the first €32,800 of such income at the standard rate of 20% and the marginal rate of 41% applies on all income thereafter. Therefore, a single or widowed individual will be liable to the marginal rate of tax on all income in excess of €32,800.

The civil status of the individual will determine the level at which a higher standard rate band applies.  In the case of a married couple or civil partners with only one income source the standard rate of tax of 20% applies on the first €41,800 and the marginal rate applies on all additional income.  For a married couple or civil partners where each party has a separate source of income a ceiling of €65,600 at the 20% rate can apply, subject to a maximum of €41,800 applying to one spouse or civil partner.  In other words, when the other spouse or civil partner earns over €23,800, they become subject to tax at the marginal rate on the excess.

Tax credits reduce the liability as calculated above and are determined based on the individual circumstances of the taxpayer.  Every single taxpayer is entitled to a personal tax credit in the amount of €1,650. This is increased to €3,300 for jointly assessed married couples or civil partners and €2,190 for a widowed person or surviving civil partner (without dependant children).

Further tax credits may be claimed where the qualifying criteria are satisfied. Some examples of the types of credits that may be applicable include:-

- PAYE credit of €1,650 which is granted to employees and pensioners;

- Single Person Child Carer Credit of €1,650, granted where a qualifying  child resides with the claimant for the whole or greater part of the year;

- Age credit of €245 granted where the taxpayer is aged 65 years or over in the year of assessment.  This is increased to €490 for married couples or civil partners;

- Home Carer Credit of up to €810 can be claimed by a spouse or civil partner who works at home caring for a child or children, or an aged or incapacitated individual. This credit is reduced if the home carer has income between €5,080 and €6,700;

- Health expenses relief can be claimed for qualifying expenses incurred in the provision of health care.  Relief is available at standard rate of 20% for all expenses other than maintenance or treatment in a nursing home which may relieved at the individual s marginal rate of tax. Information in relation to the taxation of individuals, and all tax credits, deductions and reliefs that may be applicable in individual circumstances is available on the Revenue website at .