Written answers

Tuesday, 15 January 2019

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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210. To ask the Minister for Finance if his Department or the Revenue Commissioners have an estimate of the refund of tax that may be due to persons arising from a recent High Court decision relating to the dwelling house exemption; and if he will make a statement on the matter. [1112/19]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that it is a qualifying condition of the dwelling house exemption that a person inheriting a dwelling house cannot have an interest in another dwelling house at the date of the inheritance. A recent High Court judgement held that a person inheriting a dwelling house cannot have a beneficial interest in a dwelling house forming part of the residue of an estate until the assets for distribution have been ascertained; that is, on a later date than the date of the inheritance.

The facts of the relevant case were that an individual had inherited more than one dwelling house from the same disponer and both dwelling houses formed part of the residue of the estate. The judge held that the individual did not have a beneficial interest in either of the dwelling houses at the date of the inheritance and qualifies for the exemption. Revenue have issued revised guidance on foot of the judgement to clarify that a dwelling house forming part of the residue of an estate is not to be taken into account in determining whether a successor has an interest in another dwelling house at the date of an inheritance.

Due to the nature of the information supplied on the capital acquisitions tax return it is not possible to provide an estimate as requested by the Deputy. Having regard to the specific circumstances of the case concerned, however, Revenue does not anticipate that many beneficiaries will be affected by this judgement.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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211. To ask the Minister for Finance the estimated number of income tax units on emergency tax; the corresponding data for the same period in 2018; the impact of PAYE modernisation on the numbers; and if he will make a statement on the matter. [1113/19]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that emergency tax should only apply in limited circumstances under PAYE Modernisation. These circumstances typically occur where an employee has not provided a valid Personal Public Service Number (PPSN) to an employer or where it is an employee’s first employment in the State. Also, in very rare circumstances emergency tax could apply because an employee’s tax record needs to be updated, which could prevent Revenue from issuing a ‘RevenuePayroll Notification’ (RPN). The RPN is the mechanism through which Revenue provides employers with real-time information in respect of employees’ tax credit and rate band entitlements.

Revenue has confirmed that by 11 January 2019, employers had successfully submitted pay and statutory deduction details in respect of over 1.54m employees under the new PAYE Modernisation arrangements. Of these, approximately 23,000 (1.5%) individuals were reported as being on emergency tax. It is not possible to directly compare this figure with the 2018 tax year because employers were not previously required to provide information on instances where emergency tax was applied.

Revenue has further advised me that from analysis of the submissions received to date, it is clear that some employers are unnecessarily operating emergency tax in respect of employees where an RPN is available. However, the analysis also confirms that many employers who incorrectly operated emergency tax in their first payroll run of the year have since corrected the error and applied the correct details to their employees’ second week’s earnings and refunded any overpayments.

Revenue has assured me that it will continue to very actively monitor PAYE Modernisation payroll submissions and will make direct contact with employers who appear not to be operating the system properly to assist them rectifying any errors made. Revenue also expects that the numbers of employees being placed on emergency tax will decrease further once the system beds down and employers become used to operating on a real-time basis.

Finally, I wish to commend Revenue for the successful launch of PAYE Modernisation and the seamless integration of the new real-time reporting arrangements into employers’ payroll systems.

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