Written answers

Tuesday, 21 June 2022

Photo of Michael Healy-RaeMichael Healy-Rae (Kerry, Independent)
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167. To ask the Minister for Finance if he will address a matter (details supplied) regarding stamp duty; and if he will make a statement on the matter. [32153/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Stamp duty is chargeable on the transfer of residential property such as apartments and houses at the rate of 1% where the consideration or market value does not exceed €1 million. Where the consideration or market value exceeds €1 million, stamp duty is chargeable at 1% on the first €1 million and 2% on the balance.  Stamp duty is chargeable on the transfer of non-residential property (including agricultural land) at the rate of 7.5%.

I am advised by Revenue that there is no stamp duty chargeable on the inheritance of any property, regardless of who the beneficiary is.However, where a person transfers property to a child, for example by way of a gift, stamp duty will be chargeable on the market value of the property transferred.  There are no stamp duty exemptions or reliefs in relation to transfers of residential property from a parent to a child. However, consanguinity relief may be available in relation to transfers of agricultural land.

Consanguinity relief provides for a 1% rate of stamp duty to be applied where a transfer of agricultural land (by sale, purchase, exchange, or gift) is made between certain related persons, provided certain conditions are met.  In the absence of the relief, the non-residential rate of 7.5% would apply.  The relevant relationships for the purposes of this relief are:

- Lineal descendent (child, step-child, grandchild etc.);

- Parent, step-parent and grandparent;

- Husband, wife and civil partners;

- Brother, sister, step-brother and step-sister;

- Aunt and uncle; and

- Nephew and niece.

Section 61 of the Adoption Act 2010 provides that, for the purposes of stamp duty chargeable on a conveyance or transfer of land, an adopted person will be regarded as the child of the adopter or adopters. 

Furthermore, section 1 of the Stamp Duties Consolidation Act 1999 extends the definition of child to individuals who have been in long-term fostering arrangements.  Specifically, it provides that a "child" includes a person who resided with, was under the care of, and was maintained at the expense of the transferor (or lessor) for a period of 5 years before reaching the age of 18.

Accordingly, adopted children and certain fostered children may qualify for consanguinity relief, in the same way as biological children do.

Further information in relation to consanguinity relief is available on the Revenue website at www.revenue.ie/en/tax-professionals/tdm/stamp-duty/stamp-duty-manual/schedules/schedule1-to-SDCA-1999.pdf.

Prior to Finance Act 2011, consanguinity relief was also available in relation to the sale or gift of residential property to related persons.  However, I am advised by Revenue that consanguinity relief in respect of agricultural land is now the only tax relief that is available in the case of property transfers between related persons and, as set out above, biological children, adopted children and certain fostered children may all benefit from this relief. 

In the event that the information contained in this reply is felt to not adequately clarify the position, you, or the taxpayer concerned, may wish to contact Revenue directly for further assistance.

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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168. To ask the Minister for Finance with reference to the Programme for Government commitment that tax credits and bands will be index-linked to earnings, the data on which this earnings growth is based; if it is based on Central Bank projections of compensation per employee growth of 2.3%, 4.7% and 5.1% in each of the years 2022, 2023 and 2024 respectively in its latest quarterly economic bulletin; and if he will make a statement on the matter. [32161/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware, the Programme for Government, “Our Shared Future”, states that “From Budget 2022 onwards, in the event that incomes are again rising as the economy recovers, credits and bands will be index linked to earnings. This will be done to prevent an increase in the real burden of income tax, to prevent more low income workers being taken into the tax net because of no changes to the tax system and to ensure there is no increase in the number of people having to pay higher income tax and USC rates.”   The Deputy will note that this commitment contains a proviso relating to the path for economic recovery.

In terms of earnings, the basis for the Department’s outlook are forecasts published annually in the Budget and Stability Programme Update (SPU). Both publications set out point-in-time projections for compensation of employees (or total remuneration paid to all non-agricultural employees by employers in return for work done), and compensation per employee (average pay per non-agricultural employee in the economy). A number of CSO publications inform the Department’s outlook, including the Quarterly National Accounts, Labour Force Survey, and the Earnings, Hours and Employment Costs Survey (EHECS).

Projections for earnings growth have been particularly complex in recent forecast rounds. The labour market was at the frontline of the pandemic, and a number of headline indicators were affected by the unprecedented impact of Covid-19 on the economy. This includes measures of underlying wage growth, which were distorted by compositional shifts associated with the sectors and workers most impacted by necessary public health measures.

As the Deputy will appreciate policy formulation will take place over the coming months, with the Summer Economic Statement (SES) setting out the broad economic and fiscal parameters for the Budget taking into account the overall macro-fiscal position. The Budget 2023 Economic and Fiscal Outlook will set out the labour market and earnings projections. It is within this context, and in particular these wage growth data considerations, that any new tax measures will be considered as part of Budget 2023 deliberations.


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