Written Answers Nos. 240-259
240. Deputy Réada Cronin asked the Minister for Finance if he will suspend the proposed agricultural relief changes pending the report of the Commission on Generational Renewal; and if he will make a statement on the matter. [44727/24]
Amharc ar fhreagraSections 100 and 101 of the Finance Bill 2024 (as initiated) provide for the introduction of a revised form of relief from Capital Acquisitions Tax (CAT) for gifts and inheritances of agricultural property where certain conditions are met.
I will bring an amendment at Committee stage of the Finance Bill to provide that these provisions will be subject to a commencement order. Subject to the enactment of the Bill and commencement of these provisions, the revised agricultural relief will be provided for in a new section 89A of the Capital Acquisitions Tax Consolidation Act (CATCA) 2003. It will replace the existing agricultural relief that is provided for in section 89 of the CATCA 2003.
The revised agricultural relief will differ from the existing agricultural relief in a number of respects.
A key change is the proposed introduction of two additional conditions, which relate to the ownership and use of the agricultural property prior to the date of the gift or inheritance.
The first condition is that the person from whom the beneficiary takes the gift or inheritance (the “disponer”) must have owned the agricultural property for a minimum period of 6 years prior to the date of the gift or inheritance.
The second condition is that the agricultural property must have been used for the purposes of farming by the disponer or a person to whom the property was leased in the 6 years prior to the date of the gift or inheritance.
These sections will be subject to a ministerial commencement order. This will allow time for further engagement and consultation with stakeholders, and ensure that there are no unintended consequences in relation to this measure, which is targeted at transfers of agricultural property from one generation of farmers to the next.
241. Deputy Niall Collins asked the Minister for Finance if he can consider issues raised in correspondence (details supplied); if he can assist this person; and if he will make a statement on the matter. [43970/24]
Amharc ar fhreagraSections 100 and 101 of the Finance Bill 2024 (as initiated) provide for the introduction of a revised form of relief from Capital Acquisitions Tax (CAT) for gifts and inheritances of agricultural property where certain conditions are met.
I will bring an amendment at Committee stage of the Finance Bill to provide that these provisions will be subject to a commencement order. Subject to the enactment of the Bill and commencement of these provisions, the revised agricultural relief will apply to gifts and inheritances of agricultural property taken.
The revised agricultural relief, while similar in many respects to the existing agricultural relief, differs in certain respects.
A key change is the proposed introduction of two additional qualifying conditions, which relate to the ownership and use of the agricultural property prior to the date of the gift or inheritance.
The first is that the person from whom the beneficiary takes the gift or inheritance (the “disponer”) must have owned the agricultural property for a minimum period of 6 years prior to the date of the gift or inheritance.
The second is that the agricultural property must have been actively farmed by the disponer or a person to whom the property was leased in the 6 years prior to the date of the gift or inheritance. In either case, the proposed legislation stipulates that the agricultural property must be actively farmed by an individual.
In relation to the second condition, I am advised that Revenue will accept that a lease of agricultural property may have been to another individual, a partnership or a company, as is the case under the existing agricultural relief in relation to land leased by a beneficiary. In the case of a lease to a partnership, each of the partners must have satisfied the active farmer requirements in relation to the leased land. Where the land was leased to a company, the main shareholder must have been a working director of the company and must have farmed the agricultural property on behalf of the company. Where land was leased to a company that was owned equally by an individual and his or her spouse or civil partner, at least one of them must have satisfied the working director and farming requirements to qualify for the relief. This reflects the current position in relation to land leased by a beneficiary.
Finally, I am advised that Revenue will be publishing detailed guidance on the operation of the relief.
These sections will be subject to a ministerial commencement order. This will allow time for further engagement and consultation with stakeholders, and ensure that there are no unintended consequences in relation to this measure, which is targeted at transfers of agricultural property from one generation of farmers to the next.
242. Deputy Peadar Tóibín asked the Minister for Finance the amount of VAT paid on housing and apartment building products and services in Ireland in each of the past five years; and what percentage of the total cost of a home is VAT. [44001/24]
Amharc ar fhreagraThe VAT rating of goods and services is subject to the requirements of the EU VAT Directive with which Irish VAT law must comply. In general, the Directive provides that all goods and services are liable to VAT at the standard rate unless they fall within those listed in Annex III, in respect of which Member States may apply a lower rate. The Directive also allows for a Member State’s historic VAT treatment to be maintained under certain strict conditions.
In line with these rules, Ireland applies the reduced rate, currently 13.5%, to the supply of all property including residential housing, to construction services (including fixtures installed as part of a services contract, provided the goods cost no more than two-thirds of the contract price), and to ready-to-pour concrete and certain concrete blocks. In general, other building materials are liable to VAT at the standard rate.
Suppliers who are required to charge VAT on sales of new homes are generally entitled to full recovery of any VAT incurred in the development of that property, including for example VAT at the standard rate on building materials used. Generally, sales of second-hand homes are exempt from VAT, which means no VAT is charged on their sale and there is no recovery of VAT on any costs incurred in the sale of the property.
In keeping with the VAT Directive, lettings of residential property are exempt from VAT. This means a landlord who purchases or develops residential property for the purposes of leasing is not entitled to claim any VAT incurred on costs associated with the purchase and/or development of that property.
I am advised by Revenue that traders are not required to identify the VAT yield generated from the supply of specific goods or services on their periodic VAT returns. Therefore, the information provided on tax returns does not give Revenue the necessary data to provide the figures the Deputy is seeking regarding the VAT yield from the supply of all new housing and apartment building products and services.
However, using a combination of internal and third-party data sources, Revenue has made a tentative estimate of the VAT generated on the supply of new housing completions over the last five years and this is provided in the following table:
|
Year |
VAT € billions |
|
2023 |
1.3 |
|
2022 |
1.0 |
|
2021 |
0.8 |
|
2020 |
0.7 |
|
2019 |
0.8 |
243. Deputy Peadar Tóibín asked the Minister for Finance the interest rate charged by Home Building Finance Ireland for each of the past five years; and if there are multiple rates, if he will detail these rates and the volumes loaned under these rates for each of the past five years. [44012/24]
Amharc ar fhreagraAs the Deputy will be aware, Home Building Finance Ireland ('HBFI') was established to increase the supply of new homes for owner-occupiers, renters and social housing by providing funding on commercial terms to house builders for commercially viable developments throughout Ireland.
HBFI lending is therefore on commercial terms, in line with other residential finance providers in the market. The interest rates on facilities provided by HBFI comprise a margin over 3-month Euribor, with that margin based on the risk profile of each individual facility.
While details regarding interest rates charged on each individual facility is commercially sensitive, HBFI’s margins generally range from 4.5% - 7.5% (over 3-month Euribor) and are published on the HBFI website. See details available at the following link for details - www.hbfi.ie/products
244. Deputy Peadar Tóibín asked the Minister for Finance the equity-to-debt ratio rules for banks when they lend to developers; and how these compare with other European countries. [44013/24]
Amharc ar fhreagraThe Department of Finance estimates that in order to build 50,000 homes per year, an average of €20 billion of development finance will be required.
While the State can contribute approximately €3 billion of this on our direct construction projects, the remaining €17 billion required for development must be secured by our homebuilders from private sources – our domestic banks, non-bank and alternative lenders, international institutional capital and private equity capital.
Since 2008, the funding landscape for residential development in Ireland has fundamentally changed. While there are now fewer domestic banks providing funding for residential development, there has been an increase in additional non-bank lenders active in the market, reducing concentration risk.
Lenders set risk limits around the type and nature of lending activity and in order to secure debt funding for residential development, it is necessary for a developer to also have equity funding in place on a project. The inclusion of equity in the funding structure is very important from a governance and risk management perspective. It is not desirable that domestic banks provide senior debt at unsustainable levels and levels of debt should appropriately reflect the risk profile of development projects. The inclusion of equity in the funding structure is, therefore, a key component of a sustainable, robust funding market for property development.
In relation to any specific equity-to-debt ratio, it is not possible to quantify details of development lending for residential development by our domestic banks, owing to commercial sensitivity. Banks set their own lending criteria based on their own risk appetite.
A substantial increase in the supply of new homes is the only route to solving Ireland’s housing crisis. While a portion of this private investment will come from our domestic banks, in order to deliver the homes we need, funding will be required from a diverse pool of sources, including both domestic and international capital. As a result, we continue to attract and welcome inward investment to our housing market, as we have successfully done with investment in other sectors of our economy.
245. Deputy Mark Ward asked the Minister for Finance if he considered the establishment of a ringfenced alcohol-related harm fund, as proposed by an organisation (details supplied) in the recent Budget 2025 announcement; and if he will make a statement on the matter. [44014/24]
Amharc ar fhreagraI welcome the engagement from Foetal Alcohol Syndrome Disorder (FASD) Ireland in the context of Budget 2025. As is the case with all budgetary decisions, all strands of relevant information, including submissions from stakeholder and representative bodies are taken into account when considering budgetary options. The annual budget process includes presentation policy options to the Tax Strategy Group in policy papers which are available online: www.gov.ie/en/collection/e9c8d-budget-2025-tax-strategy-group-papers/.
With regard to the FASD budgetary recommendation of hypothecation, it is important to note that with limited exceptions such as the carbon tax, hypothecation in general is not a feature of the Irish tax system as it reduces the flexibility of the Government to prioritise and allocate funds as necessary at a particular time. This constrains expenditure decisions and can distort the allocation of resources resulting in reduced value for money and sub-optimal outcomes.
Budget 2025 provided for an increase in funding for drugs services and inclusion health of €40.5 million. This includes an allocation of an additional €1 million to facilitate the national roll-out of community alcohol services. The increased investment in drug and alcohol treatment services enables a strong response to growing demand, with over 420 publicly funded drug and alcohol services providing 21,000 cases of treatment in 2023, up 10% on 2022. The funding will also focus on improving access to services in underserved communities and meeting the specific needs of people who use alcohol or stimulant drugs and those who have a dual diagnosis. Budget 2025 also allocated €4.9 million in funding for the operational costs of a new 100-bed community care facility which aims to provide enhanced tailored health, addiction and social care for single adults who are homeless in the Dublin region.
With regard to the proposed research referred to by the FSAD in their pre budget submission, I note that the Health Research Board provides financial support for research projects under qualifying conditions. Further detail is available on the website of the HRB: www.hrb.ie/funding/
246. Deputy Matt Shanahan asked the Minister for Finance if his Department is aware of unplanned downtimes on the Revenue ‘ ROS system at this time of the year, with peak filings; if filing deadlines will be appropriately extended for agents and tax payers in the event of any downtimes on ROS; and if he will make a statement on the matter. [44026/24]
Amharc ar fhreagraI am informed by Revenue that it has no planned downtime for the Revenue Online Service (ROS) system during the Pay & File period. However, unplanned downtime, by its nature, is unexpected and therefore cannot be anticipated or forewarned.
There was an issue with ROS from approximately 1:30pm to 2:30pm on 15 October. The issue was due to human error that occurred during normal system maintenance activity and was resolved within a short space of time.
Revenue has further advised that the ROS system has very high reliability with 99.99% availability recorded in Q3 2024. Over 383,000 self-assessed income tax returns for 2023 have already been filed through the system and Revenue encourages taxpayers and agents to file in advance of the deadline date. Revenue continually monitors the ROS system and addresses any issues that may occur expeditiously.
247. Deputy Pearse Doherty asked the Minister for Finance if the net tax expenditures outlined in the summer economic statement are incorporated at the same level within the projections for revenue and balances contained in the Fiscal Outlook 2025; and if he will make a statement on the matter. [44055/24]
Amharc ar fhreagra250. Deputy Pearse Doherty asked the Minister for Finance the projected net expenditure on tax measures contained in the fiscal outlook 2025 for the year 2030; and if he will make a statement on the matter. [44076/24]
Amharc ar fhreagraI propose to take Questions Nos. 247 and 250 together.
The Summer Economic Statement 2024 set out assumed (net) tax packages for the period 2025-2030. The tax package for Budget 2025 was set at €1.4 billion, with packages of €1.2 billion per year assumed thereafter.
This is reflected in the fiscal projections published as part of Budget 2025. The details of the €1.4 billion 2025 tax package announced on Budget Day are set out in the Tax Policy Changes publication.
248. Deputy Michael Lowry asked the Minister for Finance what measures are being considered to ensure that the introduction of mandatory insurance does not lead to overcharging due to a lack of competition among insurance providers, potentially contravening EU competition law; the measures he is taking to address this matter; and if he will make a statement on the matter. [44063/24]
Amharc ar fhreagraThis Government remains strongly committed to achieving a competitive and sustainable insurance market where insurance is affordable and available to all. The implementation of the Action Plan for Insurance Reform is progressing well, with vast bulk of actions now complete, and all ten principal actions finalised.
Insurance reform is a priority for the Government, overseen by the Cabinet Committee Sub-Group on Insurance Reform. The approach involves targeted action across Government departments to enhance the domestic operating environment for insurers. However, under EU legislation (Solvency II Directive), the Government cannot compel insurers in terms of coverage or pricing, as underwriting decisions are based on insurers’ assessments of risk.
Motor insurance is the one insurance product that is mandatory, in that every person intending to use a vehicle on a public road must have third-party cover at a minimum. Therefore, it is important that motor insurance is affordable. In that regard, I note that motor insurance rates have decreased by around 40 percent since their peak in July 2016. This has been accompanied by new capacity entering the market such as OUTsurance, Revolut and Fastnet, enhancing competition and benefitting approximately 2.2 million policyholders.
This illustrates the effectiveness of Ireland's insurance reform policies as our reforms, in particular targeting personal injury claim costs, have clearly mitigated against the steep rise in insurance costs seen in other markets. From my understanding, the latest National Claims Insurance Database (NCID) report highlighted an increase in motor damage claims costs. It is important to note, these are largely influenced by a range of external factors including global inflation, and supply chain issues, along with labour market tightness. Despite the higher damage costs, comprehensive motor insurance coverage reached 93 percent in 2023. The increase in comprehensive insurance is positive from a consumer point of view as the quality of motor insurance cover is now at its highest rate under the NCID data.
The aforementioned Government's Action Plan for Insurance Reform has included significant achievements since 2020, most notably amending the Occupier’s Liability Act 1995, reforming the Injuries Resolution Board and introducing the new Personal Injury Guidelines which have reduced average award levels significantly. Additionally, the establishment of the Insurance Fraud Coordination Office and the introduction of the Criminal Justice (Perjury and Related Offences) Act 2021 are pivotal steps in combating insurance fraud and ensuring a fairer claims environment.
To conclude, it is crucial for the insurance industry to support these reforms by challenging frivolous claims, adhering to new award guidelines, and promoting the Injuries Resolution Board. While the inherently cyclical nature of insurance markets and international pressures have a significant impact, Ireland’s domestic reforms aim to make it a more competitive destination for international insurance capital, including in mandatory segments.
249. Deputy Eoin Ó Broin asked the Minister for Finance for an update on the provision of a fit-for-purpose vehicle adaptation scheme to replace the disabled drivers and passenger's scheme; if a timeline is available for the commencement of a new scheme; and if he will make a statement on the matter. [44073/24]
Amharc ar fhreagraThe Deputy should note that my Department and I share concerns that the Disabled Drivers and Disabled Passengers Scheme or DDS is no longer fit-for-purpose and believe it should be replaced with a needs-based, grant-led approach for necessary vehicle adaptations that could serve to improve the functional mobility of the individual.
However, this is very much a matter for Government as whilst my Department has oversight of the DDS, I do not have responsibility for disability policy.
As the Deputy is aware the National Disability & Inclusion Strategy or NDIS Transport Working Group recommended that the DDS be replaced with a modern, fit-for-purpose vehicular adaptation scheme. This is in line with the general view that we need to move away from a medical criteria-based approach to a needs-based approach.
Under the aegis of the Department of the Taoiseach, the sub-group convened to progress NDIS proposals for needs-based, grant-aided, modern vehicle adaptation supports to replace the DDS, have generated a report that is currently being finalised.
251. Deputy Ivana Bacik asked the Minister for Finance further to Parliamentary Question No. 137 of 15 October 2024, if he will provide an update on policy options relating to new sources of climate finance; the importance of this issue as it relates to the upcoming negotiations on a New Collective Quantified Goal at COP 29; his view on which option or options are best suited to best deliver climate finance; and if he will make a statement on the matter. [44082/24]
Amharc ar fhreagraAs the Deputy will know, the Government of Ireland has committed publicly to increase the climate finance provided to developing countries, aiming to reach €225 million annually by 2025. A Cross-Departmental Climate Finance Roadmap was published in 2022 setting out pathways as to how this goal could be achieved. Since 2020, Ireland has more than doubled climate finance expenditure with the 2023 figure expected to total more than €156 million, and 2024 expenditure will likely sum to more than €181 million. A finalised figure for 2023 will be made available in the coming weeks following verification of Ireland’s 2023 Official Development Assistance (ODA) contributions by the Organisation for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC).
As part of the climate finance policy, Ireland prioritises adaptation finance and reaching the poorest and most vulnerable people, including those living in Least Developed Countries, Small Island Developing States, fragile states and communities, to ensure that they are supported and empowered to meet the challenges posed by climate change. We also champion the need for quality in climate finance delivery – in terms of access, effectiveness, gender-sensitivity, transparency and good governance.
Recognising the devastating impact that climate events can have on a country’s ability to repay debt, Ireland understands that access to climate finance is key. The funding is channelled through bilateral and civil society mechanisms, as well as multilateral funds such as the Green Climate Fund and the Global Environment Facility.
Overall, my Department has a strong and settled position of participating and discussing all manner of climate finance matters, as appropriate, in the relevant international fora – such as the EU, UN and OECD. In this context, Ireland recognises substantial sums of climate finance are needed to meet global climate and development policy objectives and that while public finance is and will remain a key driver, other sources are required, including leveraging substantial private finance resources and widening the contributor base beyond its 30-year-old existing format. In addition, I attended the 12th Ministerial Meeting of the Coalition of Finance Ministers for Climate Action during the annual World Bank/IMF meetings in Washington, DC recently, where the second joint Climate Action Statement was agreed, we revised the Coalition Charter and I participated in a discussion on ‘Designing tools, instruments, and policies to scale up nature finance’.
I understand that Irish officials have been engaged in discussions and technical expert dialogues in advance of COP29 under the New Collective Quantified Goal (NCQG) process and will continue these discussions and negotiations over the coming weeks. The Government looks forward to the COP29 meeting in Baku, Azerbaijan later this month reaching a decision on the NCQG that takes into account the needs and priorities of developing countries, that is open to a wide range of sources and instruments and that has a broad contributor base. Minister Eamon Ryan is attending on behalf of the Government and will report back on the outcome.
252. Deputy Jim O'Callaghan asked the Minister for Finance whether he intends to review the tax regime associated with exchange traded funds; and if he will make a statement on the matter. [44117/24]
Amharc ar fhreagra267. Deputy Matt Shanahan asked the Minister for Finance his views in relation to investment funds (details supplied); and if he will make a statement on the matter. [44253/24]
Amharc ar fhreagraI propose to take Questions Nos. 252 and 267 together.
I note the issues raised by the Deputies, relating to tax treatment of Exchange Traded Funds, or "ETFs", and the security of investments in trading funds.
The Deputies may wish to note that on 22 October 2024, I published the Report of the Funds Sector 2030. The Review made a number of recommendations regarding ETFs.
The Report of the Review is available at: www.gov.ie/en/publication/da341-funds-sector-2030-a-framework-for-open-resilient-and-developing-markets/
My Department is developing a work programme to progress the recommendations of the report.
253. Deputy Peadar Tóibín asked the Minister for Finance the number of staff vacancies, by grade, in his Department at the end of August 2023 and August 2024; and the number of staff, by grade, on a career break of more than five years and more than six years, at the end of August 2023 and August 2024. [44125/24]
Amharc ar fhreagraI wish to inform that Deputy that the number of staff vacancies in my Department at the end of August 2023 and August 2024 are set out in the tables below by grade:
|
Grade |
Vacancies end August 2023 |
Vacancies end August 2024 |
|
A/Sec |
0 |
0 |
|
PO |
0 |
4 |
|
AP |
7 |
7 |
|
AO |
21 |
6 |
|
HEO |
0 |
0 |
|
EO |
6 |
2 |
|
CO |
4 |
2 |
|
SVO |
0 |
1 |
|
Total |
38 |
22 |
No staff in my Department were on a career break of more than five years at the end of August 2023.
No staff in my Department were on a career break of more than six years at the end of August 2024.
The number of staff in my Department on a career break of more than five years at the end of August 2024 are listed below by grade:
|
Grade |
Number of Staff on Career Break over Five Years at the end of August 2024 |
|
PO |
1 |
|
CO |
1 |
254. Deputy Patrick Costello asked the Minister for Finance in circumstances where individuals live on a designated flood plain, such as near the Camac, but which has never flooded, the options available to them where there is only one insurance company willing to insure them and the monopoly results in annual price increases. [44146/24]
Amharc ar fhreagraIn my role as Minister for Finance, I have responsibility for the development of the legal framework governing financial regulation. However, neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products or have the power to direct insurance companies to provide flood cover to specific individuals or businesses. This position is reinforced by the EU framework for insurance which expressly prohibits Member States from doing so.
Current Government policy is focused on the development of a sustainable, planned and risk-based approach to managing flooding. Preventing flooding is the best approach to reducing flood risk and increasing flood insurance capacity. Accordingly, €1.3 billion has been committed to the delivery of flood relief schemes over the lifetime of the National Development Plan to 2030. This will protect approximately 23,000 properties across various communities from river and coastal flood risk.
This investment is complemented by a Memorandum of Understanding (MoU) between the Office of Public Works (OPW) and Insurance Ireland. The current position regarding the flood protection gap, based on recent analysis conducted by the Central Bank of Ireland, is that approximately 95% of (i.e. 19 of 20) buildings in Ireland have good access to flood insurance.
However, I am conscious of the difficulties that the absence or withdrawal of flood insurance cover can cause to homeowners and businesses. Focusing on areas near the Camac River, the Office of Public Works (OPW) has informed my Department that the Camac River was covered by the Catchment Flood Risk Assessment and Management (CFRAM) Programme. Dublin City Council and South Dublin County Council in partnership with the OPW, have commissioned the River Camac Flood Alleviation Scheme to address flooding within the catchment of the Camac River. Engineering consultants were appointed in October 2019 and the scheme is currently at Stage 1: Scheme Development and Preliminary Design. An emerging preferred option for the scheme is expected in Q2 2025. As the emerging preferred option becomes clearer a Public Consultation Day will be arranged. Updates are available on the scheme’s website.
The Department of Finance also continues to engage with multiple stakeholders on the flood protection gap and encourages further collaboration and information sharing between the various stakeholders, including both the OPW and Insurance Ireland. The Department of Finance will continue to monitor and assess any flood insurance matters, including through: its participation in an OPW and Insurance Ireland Working Group; actively encourage industry to have a more responsive approach to the matter; engage with the Central Bank of Ireland; and consider domestic and international policy developments on climate insurance issues as they arise.
Furthermore, Minister of State Richmond, has also met up with the CEOs of the main insurers in the Irish market this year. He has reiterated: (i) the expectation that insurers deal with affected policyholders fairly and in accordance with the Central Bank of Ireland Consumer Protection Code; and (ii) the need to take a reasonable approach to the provision of cover where properties are proven to be in areas protected by flood defences.
Recognising that the long-term risk of climate change on insurers and insurability, the Department of Finance continues to monitor international developments, engage with the Central Bank of Ireland, the insurance industry and actively participate in cross-departmental working groups on insurance. It is important to note in this regard that the European Commission, IMF, EIOPA and the OECD are separately examining climate risk impacts for insurance and the concept of insurance protection gaps, with recommendations for policymakers to emerge in time. It is important that developments here align with those across the EU so the Irish market is not ‘out of step’ with others.
Finally, I and Minister of State Richmond, along with our officials, will continue to engage on all aspects of insurance reform, including flood cover issues. These matters remain a priority for this Government and efforts continue to be made to encourage a responsive approach from the insurance industry.
255. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue of increasing stamp duty on residential property with a value over €1 million to 6%, including all multi-unit purchases of houses and apartments; and if he will make a statement on the matter. [44179/24]
Amharc ar fhreagraI am advised by Revenue that the additional yield from increasing Stamp Duty on residential property with a value over €1 million to 6%, including all multi-unit purchases of houses and apartments, is estimated to be of the order of €60 million. This estimate is based on the latest available Stamp Duty returns for statistical analysis, where the consideration value is above €1 million.
256. Deputy Pearse Doherty asked the Minister for Finance what is in the base each year for the rent tax credit; and if he will make a statement on the matter. [44180/24]
Amharc ar fhreagraTax policy measure costings at the time of their introduction is set out in the Tax Policy Changes booklet published as part of the Budget Day documentation.
The rent tax credit was originally introduced as part of Budget 2023. The estimated cost is set out in the Tax Policy Changes booklet, available at:
www.gov.ie/en/publication/ccc22-budget-2023-taxation-measures/
The measure was amended in Budget 2024. The estimated cost of the amendment is likewise available at:
www.gov.ie/en/publication/de3d4-budget-2024-taxation-measures/
The measure was further amended in Budget 2025, with the additional cost set out at:
www.gov.ie/en/publication/7b27b-budget-2025-taxation-measures/
The cost of the rent tax credit as amended is included in the tax base as part of the Budget 2025 fiscal projections. The rent tax credit is assumed to expire at end-2025. If the measure were to be extended beyond its current end-date, estimates would be subject to revision based on the latest available data.
257. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 88 of 16 October 2024, to outline the full cost estimated for the planned increases to the standard fund threshold contained within the economic projection of the Economic and Fiscal Outlook for each year from 2025 to 2030; and if he will make a statement on the matter. [44181/24]
Amharc ar fhreagraThe Standard Fund Threshold (SFT) is the maximum allowable pension fund on retirement for tax purposes which was introduced in Budget and Finance Act 2006 to prevent over-funding of pensions through tax-relieved arrangements.
I am informed by Revenue that they are unable provide a costing for changes to the SFT. Information on the numbers and values of individual pension funds or on individual accrued benefits in pension schemes are not generally required to be supplied to Revenue. Therefore, currently there is no readily available underlying data or methodology on which to base reliable estimates of any possible costs arising from changes to the SFT as outlined by the Deputy.
As the Deputy will be aware, the examination of the Standard Fund Threshold has recently concluded and in the context of this examination my officials examined the issue of estimating the impact of changes to the SFT using only the available information about previous payments of Chargeable Excess Tax (CET). Following this examination, the Department has prepared some indicative estimated costs, based on the information available. I would note that these estimated costs do not take account of behavioural changes and are based on a reduction of the current CET yield.
The table below sets out the indicative estimated costs from 2026 to 2030 on foot of the Minister's intended changes to SFT regime. There are no changes proposed for the SFT regime for 2025.
|
2026 |
2027 |
2028 |
2029 |
2030 |
|
€10.5 million |
€14.5 million |
€8 million |
€5 million |
€0.50 million |
It is important to note that the indicative costs above relate only to CET. All pensions are subject to tax on drawdown (with the exemption of a tax free lump sum). The examination of the SFT noted that this tax paid on drawdown should be included in any overall consideration of the cost of pensions tax relief, which could be better characterised as tax deferred. The issue of calculating the cost of pension tax expenditure will be considered by the implementation group to be established to consider further a number of the recommendations in the de Buitéir report.
258. Deputy Noel Grealish asked the Minister for Finance the number of properties in Dublin that qualified for the help-to-buy scheme in each of the years 2020 to 2023 and to date in 2024; and if he will make a statement on the matter. [44196/24]
Amharc ar fhreagraThe following table sets out the numbers of approved Help to Buy claims for properties in Dublin in each of the years 2020 to 2024 to date, based on the date the claim was approved, as of 31 October 2024.
|
Year |
Approved Claims |
|
2020 |
1,159 |
|
2021 |
1,125 |
|
2022 |
1,080 |
|
2023 |
740 |
|
2024 to date |
1,097 |
259. Deputy Noel Grealish asked the Minister for Finance the rationale to cap the maximum employer contribution of a PRSA to 100% of an individual’s salary in the year of payment from 1 January 2025; if there was significant evidence of abuse of the previous structure where annual contributions from employers were only limited by the SF; and if he will make a statement on the matter. [44197/24]
Amharc ar fhreagraThe Deputy may be aware that prior to 1 January 2023, where the combined contributions by an employer and an employee to the employee’s Personal Retirement Savings Account (PRSA) did not exceed the employee’s annual percentage limit (between 15% and 40% of “net relevant earnings”, varying depending on age, up to a maximum relieved salary of €115,000) the contributions were relieved from tax. However, where the combined contributions exceeded the applicable threshold, the amount above the threshold was treated as a taxable benefit in kind (BIK) in the hands of the employee.
Section 22 of Finance Act 2022 removed the difference in treatment between PRSAs and occupational pension schemes. The amendment abolished the Benefit in Kind (BIK) charge on employer contributions to an employee’s PRSA. In addition, employer contributions to an employee’s PRSA no longer counted towards an employee’s age and salary related percentage limits on tax deductible contributions.
As with any change in tax policy, Revenue has actively monitored developments since the introduction of these changes in Finance Act 2022. The examination of employer contributions to PRSAs in 2023 identified a number of cases that give rise to concerns. Revenue data shows that in these cases, the employer contributions to PRSAs were significantly higher that the salary associated with the employment and, in most of these cases, the employee for whom the contribution was made had a connection to the employer (for example, the company owner or a family member of the owner). Following consideration of the data, it would appear these cases are giving rise to behaviour that is not in keeping with the policy intention of the changes made in Finance Act 2022.
Section 12 of Finance Bill 2024 aims to address these concerns. If enacted by the Oireachtas, the measure will provide for an “employer limit” on employer PRSA contributions of 100% of the relevant employee’s salary. Any contributions above the “employer limit” will be considered a BIK for the employee and therefore subject to tax. Where an employee’s salary in a particular year is lower than in the previous year because of unpaid leave such as maternity leave, parental leave or extended sick leave, the limit will be 100% of the employee’s emoluments for the previous year of assessment. In addition, an employer will only be able to take a deduction for Corporation Tax purposes for PRSA contributions for an employee up to the “employer limit”.
While addressing the concerns raised by Revenue I am also cognisant of ensuring a balance and not returning to the overly restrictive limits on employer contributions to PRSAs. The introduction of a 100% of salary limit achieves this balance.
Employers currently get full tax deductibility against their profits for pension contributions on behalf of their employees and there is currently no upper limit on tax relief for employer contributions. Following enactment of Finance Bill 2024, tax deductibility for employer contributions to PRSAs will only be allowed up to the “employer limit”.
An individual’s overall pension savings (including any employer contributions and including the individual’s aggregate pension savings in all products) is subject to an overall tax relieved limit, known as the Standard Fund Threshold (SFT), which is currently €2 million.
