John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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276. To ask the Minister for Finance his plans to make changes in the next budget to treat cohabiting couples the same as married couples in terms of their income tax; the cost to the Exchequer of such a change; and if he will make a statement on the matter. [4847/15]

Michael Noonan (Limerick City, Fine Gael)
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Where a couple is cohabiting, rather than married or in a civil partnership, each partner is treated for the purposes of income tax as a separate and unconnected individual. Because they are treated separately for tax purposes, credits and tax bands cannot be transferred from one partner to the other. Cohabitants do not have the same legal rights and obligations as a married couple or couples in civil partnerships.

The basis for the current tax treatment of married couples derives from the Supreme Court decision in Murphy vs. Attorney General (1980), which held that it was contrary to the Constitution for a married couple, both of whom are working, to pay more tax than two single people living together and having the same income.

From a practical perspective, it would be very difficult to administer a regime for cohabitants which would be the same as that for married couples or civil partners. Married couples and civil partners have a verifiable official confirmation of their status. It would be difficult, intrusive and time-consuming to confirm declarations by individuals that they were actually cohabiting. It would also be difficult to establish when cohabitation started or ceased.

There would also be legal issues with regard to 'connected persons'. To counter tax avoidance, 'connected persons' are frequently defined throughout the various Tax Acts. The definitions extend to relatives and children of spouses and civil partners. This would be very difficult to prove and enforce in respect of persons connected with a cohabiting couple where the couple has no legal recognition. There may be an advantage in tax legislation for a married couple or civil partners as regards the extended rate band and the ability to transfer credits. However, their legal status has wider consequences from a tax perspective both for themselves and for persons connected with them.

With regard to the cost to the Exchequer, I am informed by the Revenue Commissioners that unmarried cohabiting couples are not separately identified in tax statistics. It is not possible, therefore, to provide the information requested by the Deputy.

However, it is estimated that the cost of extending married treatment under the income tax code to such couples could be of the order of €1 million per annum for every 1,000 cohabiting couples registered.

Any change in the tax treatment of cohabiting couples can only be addressed in the broader context of future social and legal policy development in relation to such couples.