Éamon Ó Cuív (Galway West, Fianna Fail)
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290. To ask the Minister for Finance the position regarding tax allowance and credits for couples living together; the reason the anomalies between married couples and unmarried couples still exist; if details of how they are treated can be outlined for both working and one working; the reason unmarried couples continue to be discriminated against; if it is an issue that can be corrected by legislation, or if it has constitutional implications; if he will further explain the matter; and if he will make a statement on the matter. [37501/15]

Seán Fleming (Laois-Offaly, Fianna Fail)
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317. To ask the Minister for Finance the position regarding a couple who are not married but living together, where one person of the couple is working and cannot claim tax credits in respect of the partner, but at the same time when it comes to claiming social welfare the couple are looked at as a cohabiting couple and treated as one unit for Department of Social Protection purposes; his views that this different treatment by two Departments is fair; and if he will make a statement on the matter. [37912/15]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 290 and 317 together.

I am advised by the Revenue Commissioners that the position regarding tax allowances and credits for couples living together is as follows.

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. As a consequence credits, tax bands and reliefs cannot be transferred from one partner to the other.

A cohabiting couple where both partners are working are entitled to claim, in aggregate, the same tax credits as a married couple or a couple in a civil partnership where they are both working.  The amount of income subject to tax at the standard rate (€33,800 for each individual in 2015) equates to the €67,600 marginal rate threshold in the case of a married couple or a couple in a civil partnership.

The difference between the two groups is the ability of married couples or civil partners to transfer certain elements such as the personal tax credit and part of the standard rate tax band. Specifically, part of the standard rate band entitlement of €67,600 may be transferred, allowing one spouse or civil partner to earn up to €42,800 at the standard rate.  This is of benefit where one of the individuals earns more than the standard rate threshold of €33,800 and where the other individual earns less than €33,800 or has no income.

The basis for the current tax treatment of married couples derives from the Supreme Court decision in Murphy vs. Attorney General (1980). This decision was based on Article 41.3.1 of the Constitution where the State pledges to protect the institution of marriage. The decision 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.

To the extent that there are differences in the tax treatment of the different categories of couples, such differences arise from the objective of dealing with different types of circumstances while at the same time respecting the constitutional requirements to protect the institution of marriage. 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.

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 legal status that is verifiable. By contrast, it would be difficult, intrusive and time-consuming to confirm declarations by individuals that they were actually cohabiting.  It would also be both intrusive and administratively difficult to establish when a period of cohabitation started or ceased for any given couple.

The treatment of cohabiting couples for the purposes of social welfare is primarily a matter for my colleague, the Minister for Social Protection, Ms Joan Burton TD.  However, it is also based on the principle that married couples should not be treated less favourably than cohabiting couples.  This was given a constitutional underpinning following the Supreme Court decision in Hyland v.Minister for Social Welfare (1989) which ruled that it was unconstitutional for the total income a married couple received in social welfare benefits to be less than the couple would have received if they were unmarried and cohabiting.