John Curran (Dublin Mid West, Fianna Fail)
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119. To ask the Minister for Finance if he will review the current operation of the non-resident aggregation relief tax credit; his views on whether it operates fairly; and if he will make a statement on the matter. [33650/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I presume the Deputy is referring to married couples where either one or both spouses are non resident and only one of the spouses has income chargeable to tax in this State.

I am advised by Revenue that Section 461 of the Taxes Consolidated Act 1997 (the Act) provides that the married person’s tax credit is granted to an individual who is assessable to tax on the combined income of the couple in accordance with section 1017 of the Act.  In effect, this means that in order to qualify for the married person’s tax credit the income of both individuals must be chargeable to tax in this State.

In the case of a married couple where one of the spouses is non-resident and only one spouse has income in this State, that spouse will be treated for tax purposes under the basis of separate treatment (i.e. as a single individual) and granted a single person’s tax credit during the year of assessment.

However a measure of relief may be due where the Irish tax payable under separate treatment exceeds the tax that would have been payable in respect of that income if the total income of both spouses had been chargeable to tax on the basis of aggregation. 

To avail of this, a couple should make a specific election for aggregation basis after the end of a year of assessment. The spouse with income chargeable to Irish tax should give Revenue full details of the couple’s total incomes (i.e. the income of both spouses including income not chargeable to Irish tax) after the end of the year of assessment. The case will then be reviewed on the basis of aggregation and any excess tax paid as a result of being taxed as a single individual will be repaid. 

Therefore, while the individual is treated as a single individual for tax purposes during the year of assessment, the full benefit of joint assessment is granted on review and no additional tax is suffered by the parties concerned.