Robert Troy (Longford-Westmeath, Fianna Fail)
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259. To ask the Minister for Finance the date in 2014 that section 126 (2b) of the Tax Consolidation Act 1977 was amended; if there was a regulatory impact assessment carried out in advance of the amendment; and the rationale for the amendment. [54456/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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Section 126 of the Taxes Consolidation Act 1997 (TCA) deals with the tax treatment of certain benefits payable under the Social Welfare TCA.

By way of background, I am advised by Revenue that the Social Welfare Consolidation Act 2005 (SWCA) provides for the payment of the weekly state pension. The payment is made by the Department of Social Protection to an individual who fulfils the statutory criteria. The SWCA also provides for an increase in the amount of state pension where the beneficiary of the pension has a qualified adult dependant. The qualified adult portion is described as an “increase” in the pension and is payable in respect of a spouse, civil partner or cohabitant who is being financially maintained and whose income is not greater than a specified amount.

Section 12 of the Finance (No. 2) Act 2013, which was signed into law by the President on 18 December 2013, inserted subsection 2B into section 126 TCA. The subsection became effective from 1 January 2014, confirming the tax treatment of the qualified adult dependent increase. It provides that, for all the purposes of the Income Tax Acts, any increase in the state pension in respect of a qualified adult dependent is treated as if it arises to and is payable to the beneficiary of the pension, that is, the main pension recipient.

The intention behind the amendment was to put beyond doubt that the beneficiary of a Department of Social Protection pension is assessable on the aggregate of the pension and the amount by which the pension is increased for a qualified adult dependent. This means that the pension payment is not subject to double taxation as the qualified adult increase is deemed to be part of the pension of the person beneficially entitled to the pension rather than a separate source of income for the qualified adult.

Consequently, for the tax years 2014 onwards, only one employee (PAYE) tax credit is available in respect of the state pension, including the qualified adult dependent increase, and there is no entitlement to any increase in the amount charged to income tax at the standard rate as a result of the qualified adult dependent payment.

No Regulatory Impact Assessment (RIA) was carried out in advance of the amendment to section 126 to insert subsection 2B. While such assessments are desirable, the Finance Bill falls within the category of exceptions that are provided for under the Revised RIA Guidelines issued by the Department of the Taoiseach in June 2009.The Guidelines are available at the following link:

assets.gov.ie/43562/b2c5a78227834a96ad001b381456ab18.pdf .