Pearse Doherty (Donegal, Sinn Fein)
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134. To ask the Minister for Finance if the issue of cohabiting couples being treated differently from married couples for tax purposes has been examined; his plans to amend the situation; if the cost of such changes has been examined; and if he will make a statement on the matter. [22115/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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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.  

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, tax credits, tax bands and reliefs cannot be transferred from one partner to the other. Cohabitants do not have the same legal rights and obligations as a married couple or couple in a civil partnership which is why they are not accorded similar treatment to couples who have a civil status that is recognised in law.

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 and it would be difficult to establish when cohabitation started or ceased.  Furthermore, while there may be an advantage in tax legislation for a married couple or civil partners as regards the partial transferability of the standard rate band and tax credits, their legal status as spouses / civil partners has wider consequences from a tax perspective both for themselves and persons connected with them. To counter tax avoidance, numerous restrictive provisions regarding transactions between "connected persons" are contained in the various Tax Acts and the definition of "connected persons" extends to relatives and children of spouses and civil partners. Such provisions could be very difficult to prove and enforce in respect of persons connected with a cohabiting couple where the couple has no legal recognition.

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 to 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.