Written Answers Nos. 275-94
Dáil Éireann Debate
Minister for Finance (Deputy Michael Noonan): I am advised that the Central Bank would have been aware of the existence of recorded phone conversations in Anglo Irish Bank. Banks record phone calls for a variety of reasons in the normal course of business and this was known to the Central Bank however this was not a regulatory requirement. I have been advised by the Central Bank that it was not aware of these tapes or the content contained therein. The Central Bank is carefully studying the various transcripts emerging. This is something that is viewed very seriously. The Central Bank will be liaising with the Gardaí in this regard and is also examining whether or not any breaches of regulatory requirements may have occurred arising from the information contained in the transcripts.
276. Deputy Niall Collins asked the Minister for Finance if he has sought and received legal advice outside of the Office of the Attorney General; the number of times advice was sought per year in 2011, 2012 and to date in 2013; the costs of outside legal advice per year in 2011, 2012 and to date in 2013; and if he will make a statement on the matter. [34982/13]
Minister for Finance (Deputy Michael Noonan): In general, my Department uses the services of the Office of the Attorney General and the Office of the Chief State Solicitor for legal advice. However, it also uses outside legal advisors in circumstances requiring legal services of a specific nature. The costs associated with the Office of the Attorney General and the Office of the Chief State Solicitor are borne by their respective Votes. The following table sets out the information sought by the Deputy in relation to legal advice outside of the Office of the Attorney General paid by my Department for the years 2011, 2012 and to date in 2013.
277. Deputy Finian McGrath asked the Minister for Finance if the parents of a child with a hearing disability (details supplied) in Dublin 3 qualify for the incapacitated child tax credit scheme. [35017/13]
Minister for Finance (Deputy Michael Noonan): The position is that the Incapacitated Child Tax Credit can be claimed where the child is permanently incapacitated either physically or mentally from maintaining himself/herself. I am advised by the Revenue Commissioners that a hearing disability is regarded as being permanently incapacitating only if there is severe and permanent deafness affecting both ears which cannot be corrected by a device such as a hearing aid. If the disability is of this nature, the child’s parents can claim the credit by completing the claim form for Incapacitated Child Tax Credit, which is available from the Revenue website www.revenue.ie. On completion, the form should be sent North City Revenue District, 14/15 Upper O'Connell St, Dublin 1.
Minister for Finance (Deputy Michael Noonan): I am informed by the Revenue Commissioners that Section 134(3) of the Finance Act 1992 (as amended) and Statutory Instrument No: 353 of 1994 (Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations, 1994 (as amended) provide for permanent relief from the payment of specified maximum amounts of VAT and VRT for persons registered under the scheme. The person (details supplied) purchased a new vehicle in July 2012. An Application Form (DD1) was received in Revenue’s Central Repayments Office on 6 July 2012 and an Exemption Notification issued on 10 July which permitted the vehicle to be registered exempt from VRT. Invoices in respect of the purchase and adaptation of the vehicle were received on 23 July 2012 and a cheque issued in respect of the VAT repayment due on 10 August 2012.
Where a person avails of relief under this scheme in respect of a new vehicle, the vehicle must be retained in the applicant’s possession for at least two years from the date of purchase. Disposal of the vehicle will be allowed within that time period, provided the applicant makes a refund to the Revenue Commissioners of a portion of the amount of VRT/VAT relief granted on the vehicle. This calculation is based on the formula contained in Regulation 15 of the Disabled Drivers and Passengers (Tax Concession) Regulations, 1994. The Revenue Commissioners have advised that the person (details supplied) may purchase a new vehicle at this stage and avail of relief under the Disabled Drivers/Passengers Scheme in respect of the new vehicle provided she refunds €5,896 of the relief granted on the previous vehicle.
Minister for Finance (Deputy Michael Noonan): I am informed by the Revenue Commissioners that the information requested, estimated by reference to the income tax year 2013, is set out in the following table.
These figures are estimates from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. They are therefore provisional and likely to be revised.
281. Deputy Pearse Doherty asked the Minister for Finance his views on comments (details supplied) by Commissioner Barnier on 10 July stating that the proposed bank resolution scheme would not have fully protected the State from the collapse of Anglo Irish Bank. [35119/13]
Minister for Finance (Deputy Michael Noonan): The Deputy will be aware that under the Irish Presidency on 26 June 2013 EU Finance Ministers agreed a common position on the proposal for a harmonized bank recovery and resolution regime, which sets out provisions governing how resolution is carried out and how the costs are shared. This EU-wide resolution framework for the managed resolution of banks and investment firms will give national resolution authorities all the tools to prevent crises from emerging in the first place, and address them early on in the process if they do. If the financial situation of a bank deteriorates beyond repair, national authorities will have a common toolkit and roadmap to manage the failure of banks in an orderly fashion, with a "bail-in" mechanism to call on shareholders and creditors when attributing losses of failed banks. The bail-in tool will significantly reduce the cost of bank restructuring for the State if future crises emerge.
Where bail-in is applied, the institutions’ creditors would be written down in a pre-defined order to enable the institution to regain viability. In short, shareholders would bear losses first. Once shareholders claims have been exhausted subordinated creditors would then be written down. Only when these claims have been exhausted could senior creditors be written down, with preference for eligible deposits over €100,000 of natural persons, small, medium and micro-entities. A minimum 8% of total liabilities including own funds must be bailed-in before Member States are afforded a limited flexibility to use other sources of funding including public support.
The Council agreement provides that covered depositors i.e. deposits up to €100,000 that are protected under the Deposit Guarantee Scheme (DGS) will always be excluded from bail-in. These depositors will be fully protected in any resolution action.
The Deputy raises a question on the specific application of the new bank resolution rules to Anglo Irish Bank in a hypothetical scenario. In the event that the bail-in tool was available when the crisis struck and that Anglo had been put into resolution other decisions surrounding Anglo may have been taken differently, by regulators and by creditors. Even with the benefit of hindsight it would not be possible to estimate with any degree of certainty if the existence of the bail-in tool would have avoided the need for any State support for Anglo.
Minister for Finance (Deputy Michael Noonan): The VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. Under the VAT Directive Member States may only apply the reduced VAT rate to those goods and services which are listed under Annex III of the VAT Directive. Annex III does not provide for a reduced rate of VAT to be applied to furniture. As such, the only rate that may apply to furniture is the standard rate, which in Ireland is 23%.
284. Deputy Noel Coonan asked the Minister for Finance if registration number plates for Tipperary vehicles will change following the merger of north and south county councils next year; the way this will affect motor dealerships and motorists alike; and if he will make a statement on the matter. [35146/13]
Minister for Finance (Deputy Michael Noonan): I am informed by the Revenue Commissioners that in the context of Local Government reform regulations will be drafted to amend the vehicle registration number plates for counties Tipperary, Limerick and Waterford. When finalised and signed by the Revenue Commissioner, it is intended that these regulations will come into effect from 1 January 2014 and will result in a single registration plate of "T" for Tipperary, "L" for Limerick, and "W" for Waterford, for vehicles first brought into use on or after 1 January 2014. Where a vehicle has been first brought into use in another country prior to 1 January 2014, and subsequently is imported and registered in Ireland after 1 January 2014, the current registration plates (TS, TN, L, LK, W, and WD) will used for these pre-2014 vehicles. This is to maintain the integrity of the numbering system in place for the years prior to 2014.
The changes are not expected to have an impact on either motor dealerships or motorists, as the registration numbers will continue to be assigned by Revenue at the time of registration of the vehicle.
285. Deputy Pearse Doherty asked the Minister for Finance the once-off saving that could be made for the Exchequer if he ended the provision allowing companies to carry back losses for tax rebate purposes. [35154/13]
Minister for Finance (Deputy Michael Noonan): The availability of relief for losses incurred in a business is a well-established feature of the corporation tax regime, which is in recognition of the fact that a business cycle runs over several years and that it would be unbalanced to tax profits in one year and not allow losses in another. Under Irish tax legislation a company incurring a trading loss in an accounting year can carry that loss back for offset against profits in the immediately preceding year. The carry back of a trading loss is limited to one accounting year back and there must be profits in that year for the provision to be of use to a company. A trading loss in an accounting year may also be carried forward for offset against trading profits of the same trade in subsequent years. Ireland follows the international norm in this regard. I am informed by the Revenue Commissioners that the potential saving to the Exchequer, if future claims by incorporated bodies for losses to be offset against previous year’s profits were to be disallowed, would depend on the amounts of losses incurred by companies and the extent to which there are profits in the preceding accounting year against which such losses would otherwise be available for set-off. It is not possible to anticipate what these would be.
By way of illustrating this latter point, data from corporation tax returns for 2010 and 2011 (the latest years available) show that for 2010 the amount of trading losses carried back for offset against profits earned in a previous year was €445m while the comparable figure for 2011 is in the region of €552m. The actual saving to the Exchequer in respect of those years under the Deputy’s proposal would depend on the tax rate applicable to the profits of the companies concerned but assuming that this was the standard 12.5% rate, the savings under the proposal would have amounted to about €56m in 2010 and about €69m in 2011. The Deputy should note, however, that the estimated savings for 2010 and 2011 are not necessarily indicative of what the savings might be for future years. Also, since under the proposal companies could continue to carry forward losses for offset against future profits, the estimated Exchequer savings outlined would be temporary in nature.
I should add that losses incurred in a trade are a fact of business life and the provision of relief for such losses is a standard feature of our tax code and that of all other countries in the OECD. It would be difficult to justify taxing business income without taking due account of business losses.
286. Deputy Pearse Doherty asked the Minister for Finance the current treatment of undistributed reserves in companies; if he will set out the revenue that could be raised for the Exchequer if the tax-free lump sum upon retirement for directors, who withdrew them from the undistributed reserves, be reduced to €200,000 and capital acquisitions tax, at a rate of 40%, was applied to the remainder of the money drawn down. [35156/13]
Minister for Finance (Deputy Michael Noonan): The tax treatment of undistributed reserves in companies is dealt with by sections 440 and 441 of the Taxes Consolidation Act 1997. Section 440 provides for an additional charge of corporation tax (referred to as a surcharge) on undistributed investment and estate income of close companies. A close company will be liable to a surcharge of 20% on any investment and rental income that is not distributed within 18 months of the accounting period in which that income was earned. Section 441 provides for a similar surcharge of 15% on 50% of any trading or professional income of a professional service close company that is not distributed within 18 months of the relevant accounting period. €2,000 may be retained by a close company without incurring a surcharge.
A close company is a company under the control of five or fewer participators, or of more than five participators who are directors, including their associates. Broadly speaking, a participator is any person with a share or interest in the capital or income of a company. A service company is a close company whose business consists of carrying on a profession or providing professional services or which exercises an office or employment.
With regard to the treatment of tax free lump sums on retirement I assume that the Deputy is referring to an ex-gratia lump sum which might be awarded out of company funds to a director on ending employment with a company and not a pension lump sum paid out of the director’s approved pension scheme.
Section 123 of the Taxes Consolidation Act 1997 imposes, (subject to a number of exemptions and reliefs provided under section 201 and Schedule 3 of that Act), a charge to income tax in respect of ex-gratia payments made by employers on the termination of an employment, where the payment would not otherwise be chargeable to income tax under general income tax law.
Statutory redundancy payments are exempt from income tax. In addition, ex-gratia redundancy payments or retirement gratuities in excess of the statutory redundancy amount can qualify for exemption, with the exempt amount varying according to the number of years service of the individual, the level of earnings in the last three years of employment and the individual’s entitlement to any tax-free lump sum from an approved pension scheme.
The maximum tax-free element of an ex-gratia payment made in respect of termination of an employment or office is limited to €200,000. This overall limit is a lifetime cap and applies in all cases other than where an ex-gratia payment is made on death or disability.
There is a separate, additional maximum lifetime tax-free limit of €200,000 on ex-gratia payments made on the death of an employee/director or where the payment is made solely on account of disability of, or injury to, the employee/director.
In the circumstances, charging the excess over €200,000 of any payment at a rate of 40% as capital acquisitions tax, rather than at the marginal income tax rate of 41% plus USC, would result in a loss to the Exchequer.
Minister for Finance (Deputy Michael Noonan): I have been advised by the Revenue Commissioners that they have reviewed the income tax liability of the person concerned for the years 2009 to 2012 inclusive. On the basis of the information available to them the person concerned is not due a refund of tax. PAYE Balancing Statements (P21s) for 2009 to 2012 inclusive will issue shortly to the person concerned.
288. Deputy Pearse Doherty asked the Minister for Finance if the National Asset Management Agency has advanced a project completion loan to a person (details supplied); the amount of the loan that has been advanced and the project for which this loan has been advanced. [35179/13]
Minister for Finance (Deputy Michael Noonan): As the Deputy is aware, NAMA is prohibited under Sections 99 and 202 of the NAMA Act from disclosing confidential information, including details relating to individual debtors and their properties.
289. Deputy Pearse Doherty asked the Minister for Finance if Anglo Irish Bank advanced a loan to a person (details supplied) in 2009; if so, his views on a loan being advanced to this person, despite their being a member of the Maple ten; and his views on whether a loan like this should not have drawn the attention of the public interest directors in the bank. [35180/13]
Minister for Finance (Deputy Michael Noonan): I am advised by the Special Liquidators that they are not in a position to comment on individual cases. The information requested is confidential in nature and it would not be appropriate for the Special Liquidators to release such information.
290. Deputy Michael Healy-Rae asked the Minister for Finance the position regarding VAT and VRT in respect of a disabled person (details supplied); and if he will make a statement on the matter. [35181/13]
Minister for Finance (Deputy Michael Noonan): I am informed by the Revenue Commissioners that Section 134(3) of the Finance Act 1992 (as amended) and Statutory Instrument No: 353 of 1994 (Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations, 1994 (as amended) provide for permanent relief from the payment of specified maximum amounts of VAT and VRT for persons registered under the scheme. The legislation specifies that, where a person satisfies the Revenue Commissioners that s/he is a Disabled Driver who complies with all the conditions of the Disabled Drivers Scheme, that person shall be entitled to relief in respect of a vehicle with an engine capacity of up to but not greater than 2,000 c.c. It also specifies that relief is subject to a maximum limit of €9,525 in respect of a driver. Following a review, certain changes have been made in the administration of the scheme to ensure that the provisions of Section 134(3) of the Finance Act 1992 (as amended) and SI 353 /1994 are being adhered to correctly and that all applications are dealt with strictly as outlined in the legislation.
The person (details supplied) is currently a beneficiary under the scheme and relief was granted on his current vehicle on the basis that it had to be retained for a specified period, which, in this case, expires on 1 December 2014. The person submitted an application form DD1 to change his vehicle on 1 July 2013 and was advised that he could not do so until 1 December 2014. The Revenue Commissioners have made further contact with the person by telephone to clarify the circumstances and he understands the position.
291. Deputy Tom Fleming asked the Minister for Finance if he is satisfied that the banks are making adequate credit available to small and medium-sized businesses; the amount which was made available in 2012 and to date in 2013. [35270/13]
Minister for Finance (Deputy Michael Noonan): Access to finance for SMEs is a key aspect of the Action Plan for Jobs 2013. It is the Government’s vision that all viable businesses operating in Ireland should have the opportunity to access sufficient finance to meet their enterprise needs in a manner that supports growth and employment in the economy. The Government has imposed SME lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion last year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks have achieved their 2011 and 2012 targets and the recent Credit Review Office (CRO) report commented “At the end of quarter 1, both banks’ sanctions are on or near where they would be expected to meet the target, taking account of the seasonality which has been identified over the past two years.”
292. Deputy Paudie Coffey asked the Minister for Finance if he will extend the 9% VAT rate for the hospitality sector for the next 12 months in view of the fact that budgetary targets are being met; and if he will make a statement on the matter. [35347/13]
Minister for Finance (Deputy Michael Noonan): Any proposals to extend the 9% rate for the hospitality sector into 2014 will be considered in the context of Budget 2014.
293. Deputy Tom Fleming asked the Minister for Finance following on from the decision to reduce the VAT rate from 13% to 9% and the significance of this reduction to the tourism sector here and the very positive implications it has had on the industry in creating and maintaining jobs, giving value for money (details supplied), if he will support the calls to keep the VAT rate at 9% and ensure that Ireland has a strong and competitive tourism industry; and if he will make a statement on the matter. [35359/13]
Minister for Finance (Deputy Michael Noonan): Any proposals to maintain the 9% rate for tourism related services will be considered in the context of Budget 2014.
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