Michael McGrath (Cork South Central, Fianna Fail)
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The position is that a range of tax credits are provided for in Part 15 of the Taxes Consolidation Act 1997 (TCA). Broadly, tax credits may be used to reduce the amount of income tax payable by an individual in a year of assessment, but only to the extent that they reduce the liability for that year to nil.

Eligibility for the range of tax credits is based on varying criteria applicable to each specific credit, and the facts and circumstances of the individual claimant. The value of specific credits may also vary, with the value of some credits being equal to a specific amount, whilst others are based on qualifying expenditure incurred by the claimant.

Tax legislation (section 458(1A) TCA) provides that where an individual proves his or her entitlement to a specific tax credit, the credit awarded to him or her will be equal to the lesser of:

• the value of the relevant tax credit; and
• the amount required to reduce the individual’s income tax liability to nil.

As the value of tax credits is limited to the amount that reduces an individual’s income tax liability to nil, it is possible that an individual may be entitled to more credits than he or she is able to utilise in that year. Tax credits, which are not fully utilised in the year of assessment may not be carried forward into future tax years and this applies irrespective of the age of the taxpayer. Where the individual is jointly assessed to tax, he or she may be able to transfer a portion of unused credits to his or her spouse or civil partner in the year of assessment. Otherwise, such credits may remain unutilised.

In the year of death an individual is taxed on their normal basis up to the date of death with tax credits being utilised as set out above, and no carry forward available where not fully utilised. Where the person who is deceased was subject to tax on a joint assessment basis, differing tax credits and treatments apply for the surviving spouse or civil partner depending on whether they were the assessable person prior to the date of death or not and the basis of assessment that applied prior to the date of death. In all cases the tax credits are utilised as set out above, are not available for carry forward into future years. I have no plans to amend this current tax treatment.

Further information on tax credits is available on Revenue’s website available at: www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/index.aspx .