The Exchequer will lose more than €100m as a result of tax changes
brought about by civil partnership, which will also benefit couples who
live together.
The new laws will give gay couples who sign up to
civil partnership as well as cohabiting heterosexual couples similar tax
treatment to married people.
A leading tax specialist has
calculated that cohabiting couples could save more than €1,000 per
household in income tax each year -- and that doesn't include new
benefits from other tax changes affecting assets including property.
Latest
figures show the number of cohabiting couples leapt from 31,300 in 1996
to 121,800 in 2006 and they now account for one in 12 family units
The
Finance (No 3) Bill 2001 also allows registered civil partnerships to
avail of the same tax benefits for areas such as stamp duty, capital
acquisitions tax, capital gains tax and VAT.
It also allows for
the taxation redress scheme to be applied for opposite-sex and same-sex
cohabiting couples in the event of the break-up of their relationships.
The bill was published last Thursday by Finance Minister Michael Noonan
and was provided for in the Civil Partnership and Certain Rights and
Obligations of Cohabitants Act 2010 which was prepared by the last
government.
Christine Kiely of taxback.com believes that by the
end of the month cohabiting couples will begin seeing a change to their
tax credit certificates where they will be entitled to married credits
and the married standard rate band -- the amount of their salary taxed
at 20 per cent.
Single-income households are likely to benefit
most where the other partner may be unemployed and the employed
individual can avail of unused credits and the standard rate band.
Ms
Kiely told the Sunday Independent that more than 120,000 cohabiting
couples in the country could knock €1,000 or more of their tax bill.
She
explained that under the current tax law a married couple who have one
income pay 20 per cent on the first €41,800 they earn with the balance
taxed at 41 per cent.
Up to now cohabiting couples have been
treated as single persons for tax purposes so only the first €32,800 of
their income is taxed at 20 per cent with the balance taxed at 41 per
cent.
Now cohabiting couples will be treated the same as married couples
so they will save €1,890 in tax.
Couples with dual incomes also stand to make substantial tax savings.
"Up
to now, cohabiting couples have not been in receipt of favourable tax
treatment. However, the new legislation has essentially put those in
registered civil partnerships on an equal footing with their married
friends. The introduction of similar entitlements will be greatly
welcomed. The bill has introduced tax legislation that is fair and
mirrors entitlements of married couples allowing peace of mind and
equality to registered civil partners," Ms Kiely said.
"If only
half of the estimated number of cohabiting couples max out on the income
tax savings, this could cost the Exchequer up to €100m. Capital gains
tax and capital acquisitions tax savings would be in addition to this
figure," she added.