Colm Burke (Cork North Central, Fine Gael)
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342. To ask the Minister for Finance if he will give consideration to the granting of enhanced tax credits specifically targeted at young adult carers, to enable them to remain in the workforce; and if he will make a statement on the matter. [13745/23]

Michael McGrath (Cork South Central, Fianna Fail)
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As the Deputy will be aware, this Government remains fully committed to supporting and protecting those most vulnerable in society through both tax and expenditure measures.

The Irish tax code provides for a wide range of tax credits, reliefs and allowances for individuals who are carers or have care responsibilities. Eligibility for these tax credits, reliefs and allowances is based on the conditions and criteria attached to each individual measure and the claimant’s personal circumstances.

Revenue pro-actively corresponds with different cohorts of taxpayers to publicise the range of credits which they may be entitled to claim, however any individual who requires assistance in determining the full range of credits and reliefs which he or she may be entitled to claim, based on their personal circumstances, should contact the Revenue office which deals with his or her tax affairs. Contact details for various Revenue offices can be found at the following link: www.revenue.ie/en/contact-us/index.aspx.

Furthermore, this Government believes that taxpayers enter the income tax net and the higher rate of income tax at too low an income level.Accordingly, over the last two Budgets, the Government have introduced income tax packages which have effectively indexed the main personal tax credits and income tax standard rate bands within the fiscal resources available. For example, the single person and the employee tax credits have been increased by €125 or 7.6 per cent from €1,650 to €1,775. As a result the entry point to income tax for a single individual has increased from €16,500 to €17,750. In addition, the single person standard rate band has increased by €4,700 or 13.3 per cent from €35,300 to €40,000. These changes were carefully designed to ensure that workers, including those with care responsibilities, did not find themselves in a position where they pay income tax for the first time or more income tax solely because of wage growth inflation.

In relation to the Deputy’s specific question, the position is that I have no plans to enhance or introduce tax credits specifically targeted at young adult carers.For the Deputy’s convenience details of the main credits, reliefs and allowances available for individuals who are carers or have care responsibilities are set out below, with further details available at the following link: www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/index.aspx.

It is important to point out that these tax credits, reliefs and allowances are available in addition to other supports provided by Government bodies such as the Department of Health, the Department of Social Protection and the Department of Children, Equality, Disability, Integration and Youth to assist those with caring responsibilities.

Exempt Income

An exemption from income tax applies in respect of the carer’s support grant and the domiciliary care allowance, which are payments made by the Department of Social Protection.

Standard Rate Tax Band

The standard rate band, which is the amount of an individual’s income that is subject to tax at the standard rate of tax (currently 20 per cent), is provided for in section 15 of the Taxes Consolidation Act (TCA) 1997.

The standard rate tax band due to a single person or surviving spouse or civil partner for the 2023 year of assessment is €40,000. This increases to €44,000 where the individual is entitled to the single person child carer tax credit (see below).

For jointly assessed married persons or civil partners, the standard rate tax band due depends on whether both parties to the couple have their own source of income. If only one party is in receipt of income, the standard rate tax band due to the couple for the 2023 year of assessment is €49,000. This can be further increased by up to €31,000, raising the total standard rate band due to the couple to a maximum of €80,000. The actual increase applicable in such cases is the lesser of €31,000 or an amount equal to the specified income of the lower earning party.

Single Person Child Carer Tax Credit

The single person child carer tax credit is provided for in section 462B TCA 1997 and is available to any single person who has a “qualifying child” resident with him or her for the whole or greater part of the year of assessment. The credit is granted in the first instance to the primary claimant who may, if he or she so wishes, relinquish it for the year of assessment to a secondary claimant. A single person, for this purpose, is an individual who is not jointly assessed to tax as a married person or civil partner, living with his or her spouse or civil partner or cohabiting with a partner.

A qualifying child includes a child born in the tax year, a child who was under the age of 18 at the start of the tax year, or a child who was over the age of 18 at the start of the tax year if he or she is either in full-time education or is permanently incapacitated by reason of mental or physical infirmity from maintaining themselves (having become so incapacitated before reaching the age of 21 or whilst in full-time education).

The tax credit due, where the relevant conditions are met, is valued at €1,650 and only one credit is due to a claimant in the year of assessment irrespective of the number of qualifying children who reside with him or her.

Incapacitated Child Tax Credit

The incapacitated child tax credit is provided for in section 465 TCA 1997 and is available to any individual who has living, at any time during a year of assessment, a child who:

1.if under the age of 18, is permanently incapacitated by reason of mental or physical infirmity to such an extent that there is a reasonable expectation that the child would be incapacitated from maintaining him or herself if they were over the age of 18; or

2. if over the age of 18, is permanently incapacitated by reason of mental or physical infirmity from maintaining him or herself and had become so incapacitated either before attaining the age of 21 or whilst in full-time instruction at any university, college, school or other educational establishment.

The tax credit due, where the relevant conditions are met, is valued at €3,300 and a separate credit is available in respect of each child who meets the conditions set out above. Where the claimant qualifies for both this tax credit and the dependent relative tax credit in a year of assessment, he or she will be granted this credit only.

Dependent Relative Tax Credit

The dependent relative tax credit is provided for in section 466 TCA 1997 and is available to any individual who maintains, at his or her own expense:

-any relative (including the relative of a spouse or civil partner) who is incapacitated by old age or infirmity from maintaining himself or herself;

-either his or her own or their spouse or civil partner’s widowed parent (whether incapacitated or not); or

- a child of either the claimant or his or her spouse or civil partner, who resides with the claimant and on whose services the claimant, by reason of old age or infirmity, is compelled to depend.

In addition, any income due to the person being maintained by the claimant must not exceed the specified amount which, for the 2023 year of assessment, is €16,780.

The tax credit due, where the relevant conditions are met, is valued at €245 and a separate credit is available in respect of each person the claimant maintains. As noted above, this credit cannot be claimed in conjunction with the incapacitated child tax credit.

Home Carer’s Tax Credit

The home carer tax credit is provided for in section 466A TCA 1997 and is available to jointly assessed married couples or civil partners where one spouse or civil partner (the ‘home carer’) stays at home to take care of a dependent person.

A dependent person includes:

- a child in respect of whom the home carer, or his or her spouse or civil partner, is in receipt of child benefit;

- an individual aged 65 years or over; or

- an individual who is permanently incapacitated by reason of mental or physical infirmity.

The dependent person must normally reside with, or in close proximity to, the married couple or civil partners for the relevant year of assessment.

To obtain the full tax credit, which is €1,700 for the 2023 year of assessment, the home carer’s income for the year must not exceed €7,200. Carer’s Benefit and Carer’s Allowance received by the home carer is disregarded for this purpose. Where the home carer’s income is between €7,200 and €10,600 a partial credit will be available, but the credit available will be reduced to nil where the home carer’s income exceeds €10,600.

In addition, married couples or civil partners cannot claim both the increased standard rate band for dual income couples and the home carer tax credit in the same year of assessment. In practice, Revenue will grant whichever relief will provide the most beneficial treatment to the couple.

Employing a Carer

Relief for the cost of employing a carer to care for an incapacitated person is provided for in section 467 TCA 1997 and is available to any individual who incurs costs in employing another person to care for his or her spouse or civil partner, or a relative of their own or of their spouse or civil partner.

The incapacitated individual can be the claimant themselves, if he or she is the one who incurs the relevant cost.

The relief available, where the relevant conditions are met, is given by way of a deduction and is equal to the lesser of the cost incurred by the claimant and €75,000.

This relief cannot however be claimed where the person employed to take care of the incapacitated person is the same individual in respect of whom the claimant receives either the incapacitated child or dependent relative tax credits.

Finally, it is important to note that the cumulative relief available to individual taxpayers cannot exceed the total amount required to reduce his or her income tax liability to nil.