Dáil Éireann Debate, Tuesday - 5 November 2024
280. Deputy Pearse Doherty asked the Minister for Finance if he has considered amending section 126 (2B) of the Taxes Consolidation Act 1997 to ensure that adult dependant social welfare pensions could be paid directly to the adult dependant; to outline the wider implications and costs related to such an amendment; and if he will make a statement on the matter. [44733/24]
View answerSection 126 of the Taxes Consolidation Act 1997 (TCA) deals with the tax treatment of certain social welfare payments.
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 dependent. 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 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 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.
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.
I currently have no plans to amend section 126 (2B) of the Taxes Consolidation Act 1997, as suggested by the Deputy.
Finally, I am advised by Revenue that as information in respect of increases in the State pension in respect of a qualified adult dependents are not reported separately to Revenue, there is no data available to Revenue from which to provide an estimate of the cost of the change outlined by the Deputy.
