Written answers
Tuesday, 11 July 2023
Department of Finance
Tax Code
Peadar Tóibín (Meath West, Aontú)
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206. To ask the Minister for Finance what lobbying has been documented on the file pertaining to the setup and development and implementation of the residential zoned land tax. [34200/23]
Peadar Tóibín (Meath West, Aontú)
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210. To ask the Minister for Finance how many planning authority/local authority officials raised concerns with his Department in relation to the implementation and execution of the residential zoned land tax. [34211/23]
Michael McGrath (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 206 and 210 together.
The residential zoned land tax (RZLT) is a new tax introduced in Finance Act 2021 which seeks to increase housing supply by encouraging the activation of development on lands which are suitably zoned and appropriately serviced. It aims to bring those lands which have benefitted from investment in services and are capable of being developed forward for housing. The tax is an action contained in Housing for All, the Government’s plan for housing, to increase housing supply and is supported in the Programme for Government.
As with all tax policy areas, the Department receives representations, submissions and general correspondence from interested parties, including from taxpayers and various representative bodies. In relation to the residential zoned land tax, the Department has received correspondence from various industry representative bodies, including those representing the agriculture, building and construction industries. The Department has also received correspondence from individuals and other organizations regarding the tax. All correspondence received is considered as part of policy formation and as part of the normal budgetary and Finance Bill process.
My Department and the Department of Housing, Local Government and Heritage continue to engage with representative bodies in relation to the residential zoned land tax.
In relation to the Deputy's specific query regarding the number of local authorities which have contacted my Department regarding the residential zoned land tax, I can confirm that I have received correspondence from three local authorities regarding the tax.
Peadar Tóibín (Meath West, Aontú)
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207. To ask the Minister for Finance what influence, if any, his Department or the Revenue Commissioners have on the adoption of the broad-brush approach used to creating, mapping and implementing the residential zoned land tax. [34203/23]
Michael McGrath (Cork South Central, Fianna Fail)
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A key objective of the Government’s Housing for All plan is a pathway to increase housing supply, including a focus on providing an adequate supply of available serviced zoned land for the development of housing. In this regard, provision was made for a new tax on land zoned for residential development, which also has the necessary services in place. The purpose of this Residential Zoned Land Tax (RZLT) is to encourage development of appropriately zoned and serviced land. It is designed primarily as a behaviour changing measure and not to be a significant revenue raising measure.
Finance Act 2021 introduced Part 22A of the Taxes Consolidation Act 1997, which outlines the process by which a mapping exercise is undertaken by local authorities to identify zoned and serviced land which falls within the scope of RZLT. The legislation provides that each local authority will prepare and publish a final map identifying land within the scope of the tax by 1 December 2023. Draft zoned land maps were prepared and published by local authorities for their respective functional areas by 1 November 2022. Supplemental maps were published by local authorities by 1 May 2023.
The Department of Finance and the Revenue Commissioners had no influence or role in the approach taken, broad-brush or otherwise, to create the residential zoned land maps for the purposes of the residential zoned land tax.
I have been informed by officials in Department of Housing, Local Government and Heritage that local authority planning departments, in conjunction with Department of Housing Local Government and Heritage, published a Residential Land Availability Survey (RLAS) in February 2015, covering all lands zoned for residential development in statutory local authority development plans and local area plans across Ireland. The survey showed the location and quantity of lands that may be regarded as being undeveloped and available for residential development purposes in each local authority area.
I have also been informed by the Department of Housing, Local Government and Heritage that the aggregate area of all such private and public land identified in 2015 amounted to 17,434 hectares which, given a range of densities applicable to whether the lands are in small villages or in larger towns and cities and as determined by the relevant local authorities, was estimated to ultimately enable the construction of in excess of 400,000 dwellings.
Peadar Tóibín (Meath West, Aontú)
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208. To ask the Minister for Finance what consideration was given to the impact of residential zoned land tax liabilities on working farm incomes and the impact of this tax on the income of farming families, many of whom are operating on the knife-edge of viability. [34208/23]
Peadar Tóibín (Meath West, Aontú)
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209. To ask the Minister for Finance the input from the Minister of Agriculture, Food and the Marine in the formation of the residential zoned land tax and the criteria for exclusion, given that there is no exclusion for working farmland; and if he will make a statement on the matter. [34209/23]
Michael McGrath (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 208 and 209 together.
The Residential Zoned Land Tax (RZLT) is a new tax introduced in Finance Act 2021 which seeks to increase housing supply by encouraging the activation of development on lands which are suitably zoned and appropriately serviced. It aims to bring those lands which have benefitted from investment in services and are capable of being developed forward for housing. The tax is an action contained in Housing for All, the Government’s plan for housing, to increase housing supply and is supported in the Programme for Government.
The tax applies to land that is:
- zoned suitable for residential development whether it be solely or primarily for residential use, or for a mixture of uses, including residential use, and
- serviced (that is: reasonable to consider may have access, or be connected, to public infrastructure and facilities, including roads and footpaths, public lighting, foul sewer drainage, surface water drainage and water supply, necessary for dwellings to be developed and with sufficient service capacity available for such development)
Each local authority, in preparing the draft RZLT maps, determined whether the zoned land is connected or able to connect to the six required categories of services. Any exclusions which would rule the land out of scope were applied. The local authorities then published a draft RZLT map identifying the land which meets the requirements of the legislation and which may be liable to the tax. The tax will first be due and payable in 2024.
It is important to note that, to come within the scope of RZLT, farmland must be both zoned for residential use and serviced. Farmland that is zoned for residential use, but which is not currently serviced, is not within the scope of the tax and will only come within the scope of the tax should the land become serviced at some point in the future.
Agricultural land which is zoned solely or primarily for residential use meets the criteria set out within the legislation and therefore falls within the scope of the tax. Agricultural land that is zoned for a mixture of uses including residential is not in scope. These zonings are considered to reflect the housing need set out within the core strategy for the relevant local authority area and landowners within such zonings may fall within the scope of the tax, in the interests of ensuring an appropriate supply of housing on zoned lands.
A landowner with land identified on any published draft map had the opportunity to make a submission to the local authority regarding the land, setting out why they consider that the land does not meet the criteria for inclusion within the scope of the tax. For example, if the land is not zoned for residential use, if the land does not have access to or there is no capacity for any of the six servicing criteria, or if the land benefits from an exclusion as outlined in the legislation. The local authority was required to assess any submission and inform the landowner of their decision to either remove or retain the land on the map by 1 April 2023. If dissatisfied with the local authority decision, the landowner could have appealed the determination to An Bord Pleanála, again setting out why the land does not meet the criteria for inclusion for the tax.
In addition to being able to make a submission regarding inclusion of land on a draft map, the landowner had the opportunity to submit a request to change the zoning of the land by variation of the adopted development plan. Where the zoning is amended to a use other than residential or mixed use including residential, it would not meet the criteria for the tax and would be removed from RZLT maps. Decisions on whether to amend zonings as a result of submissions or at any other time are a matter for the local authority, taking into account the need to ensure that housing supply targets across the county can be met. Additionally, provision is made in the Planning and Development Act 2000 for elected members to seek a report from their Chief Executive on the matter of proposed re-zonings.
It is acknowledged that the tax may impact on some landowners, including farmers, however if the land in question is zoned for a particular purpose under a plan adopted by the local authority and has been subject to investment by the local authority and the State in the services necessary to enable development for housing to accommodate increased population, it is intended that the land should be used for housing. This tax measure is a key pillar of the Government’s response to address the urgent need to increase housing supply in suitable locations.
In relation to the Deputy's query regarding input from the Minister of Agriculture, Food and the Marine, I would remind the Deputy that this tax was developed on foot of a Government decision in the context of the Housing for All plan which aims to increase housing supply in the country. My Department continues to engage with the Department of Agriculture, Food and the Marine on the Residential Zoned Land Tax as well as engaging with representative bodies for the sector.
Peadar Tóibín (Meath West, Aontú)
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211. To ask the Minister for Finance if his Department has given any consideration to rescinding and reconsidering the residential zoned land tax in its current format until the multitude of problems associated with its scoping and implementation have been resolved. [34212/23]
Michael McGrath (Cork South Central, Fianna Fail)
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The residential zoned land tax (RZLT) is a new tax introduced in Finance Act 2021 which seeks to increase housing supply by encouraging the activation of development on lands which are suitably zoned and appropriately serviced. It aims to bring those lands which have benefitted from investment in services and are capable of being developed forward for housing. The tax is an action contained in Housing for All, the Government’s plan for housing, to increase housing supply and is supported in the Programme for Government.
The tax applies to land that is:
- zoned suitable for residential development whether it be solely or primarily for residential use, or for a mixture of uses, including residential use, and
- serviced (that is: reasonable to consider may have access, or be connected, to public infrastructure and facilities, including roads and footpaths, public lighting, foul sewer drainage, surface water drainage and water supply, necessary for dwellings to be developed and with sufficient service capacity available for such development)
The local authorities, in preparing draft RZLT maps, determined whether the zoned land is connected or able to connect to the six required categories of services. Any exclusions which would rule the land out of scope were applied. The local authorities then published a draft RZLT map identifying the land which meets the requirements of the legislation and which may be liable to the tax. The tax will first be due and payable in 2024.
Land which is zoned solely or primarily for residential use meets the criteria set out within the legislation and therefore falls within the scope of the tax. These zonings are considered to reflect the housing need set out within the core strategy for the relevant local authority area and landowners within such zonings may fall within the scope of the tax, in the interests of ensuring an appropriate supply of housing on zoned lands.
A landowner with land identified on any published draft map had the opportunity to make a submission to the local authority regarding the land, setting out why they consider that the land does not meet the criteria for inclusion within the scope of the tax. For example, if the land is not zoned for residential use, if the land does not have access to or there is no capacity for any of the six servicing criteria, or if the land benefits from an exclusion as outlined in the legislation. The local authority was required to assess any submission and inform the landowner of their decision to either remove or retain the land on the map by 1 April 2023. If dissatisfied with the local authority decision, the landowner could have appealed the determination to An Bord Pleanála, again setting out why the land does not meet the criteria for inclusion for the tax.
In addition to being able to make a submission regarding inclusion of land on a draft map, the landowner had the opportunity to submit a request to change the zoning of the land by variation of the adopted development plan. Where the zoning is amended to a use other than residential or mixed use including residential, it would not meet the criteria for the tax and would be removed from RZLT maps. Decisions on whether to amend zonings as a result of submissions or at any other time are a matter for the local authority, taking into account the need to ensure that housing supply targets across the county can be met. In addition, provision is made in the Planning and Development Act 2000 for elected members to seek a report from their Chief Executive on the matter of proposed re-zonings.
The Department of Finance and Department of Housing, Local Government and Heritage continue to engage with various representative bodies in relation to their concerns regarding the implementation of the RZLT measure.
It is acknowledged that the tax will impact on landowners, however if the land in question is zoned for a particular purpose under a plan adopted by the local authority and has been subject to investment by the local authority and the State in the services necessary to enable development for housing to accommodate increased population, it is intended that the land should be used for housing.
This tax measure is a key pillar of the Government’s response to address the urgent need to increase housing supply in suitable locations. I have no plans to rescind the residential zoned land tax at this time.
Paul Kehoe (Wexford, Fine Gael)
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212. To ask the Minister for Finance following the rule from 1 July 2023 that non-resident landlords have to use an agent to collect their rent and remit 20% of same to the Revenue Commissioners, or the landlord has to allow the tenant deduct 20% from the rent and remit it directly to Revenue Commissioners on behalf of the landlord, if the tenant pays 80% of the rent to the landlord but fails to remit the 20% to the Revenue Commissioners when the landlord does the return at the end of 2023, if they will be held liable for the tax that was not handed over; and if he will make a statement on the matter. [34268/23]
Michael McGrath (Cork South Central, Fianna Fail)
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I am advised by Revenue that the obligation imposed on tenants (and other parties such as local authorities) to deduct and remit to Revenue withholding tax at the standard rate of income tax (currently 20%) from rental payments made directly to a landlord who lives outside the State, has been in operation for many years. However, since 1 July 2023, the system for remitting the deducted tax has changed. Tenants paying directly to a non-resident landlord can now use the new Non-Resident Landlord Withholding Tax (NLWT) system in Revenue Online Services (ROS) or MyAccount, rather than using a paper form, as was previously the case. Through this system, tenants will make rental notifications (RNs) when rent is paid and pay the 20% withheld from the rent to Revenue. Tenants of non-resident landlords are also now required to provide certain information to Revenue including the address of the property, the rental payment, and the name and address of the non-resident landlord.
Prior to 1 July 2023, where a rental payment was not made directly by a tenant to a non-resident landlord, that landlord’s “collection agent” was assessable and chargeable to tax for the income of the non-resident landlord. This meant that agents were required to file tax returns and pay the tax due on that income, and were permitted to retain part of the rents to pay the tax due. It is still open to collection agents to follow that practice. However, with effect from 1 July 2023, an alternative process is available. Collection agents can be relieved of the obligation of being assessable and chargeable for such income, provided they deduct and remit to Revenue withholding tax (also at 20%) from rental payments and provide information on the landlord and the tenancy. Collection agents will also complete the new RN and remit the withholding tax online.
The Deputy has asked what happens when a tenant of a non-resident landlord pays 80% of the rent to the non-resident landlord but fails to remit the 20% to Revenue. The tenant is liable for the withholding tax and the assessment, charging, collection and recovery provisions of the Taxes Consolidation Act 1997 (TCA) can be applied in the event of non-payment. This was the case prior to the introduction of the new system and has not changed. Where the collection agent opts to deduct and remit withholding tax from a rental payment to Revenue, the agent will similarly be liable for payment of the tax and the assessment, charging, collection and recovery provisions of the TCA will likewise apply.
The new NLWT system permits non-resident landlords to view rental notifications online and allows them to review the tax deducted by a tenant or collection agent from the rental payments against what has been remitted to Revenue. As the new NLWT system operates in real time, non-resident landlords and Revenue will get early notice of any failure by tenants or collection agents to remit the deducted tax in a timely manner. This will mean any payment issues can be addressed more promptly than was possible in the previous paper-based system.
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