THE MAXIMUM cost to the exchequer of extending marriage-like income
tax benefits to same-sex civil partners is likely to be €3 million for
every 1,000 couples, according to calculations by Government officials.
Latest
figures show that 614 civil partnerships have either been registered or
are due to be registered this year since the system was introduced at
the beginning of the year.
Legislation being finalised in the Dáil
this week allows registered civil partners to avail of the same tax
benefits in areas such as income tax, stamp duty, capital acquisitions
tax, capital gains tax and VAT.
The Finance (No 3 Bill) also
allows for a redress scheme for opposite-sex and same-sex cohabiting
couples in the event of the break-up of their relationships.
In a
statement, the Department of Finance said the €3 million estimate for
the cost of extending income tax benefits to civil partners is the
maximum cost and, in reality, is likely to be much less.
The exchequer, however, could stand to lose out on more tax revenue when changes to stamp duty and other taxes are factored in.
For
example, transfers of property between civil partners will now qualify
for the same exemption from stamp duty as is given to married couples.
The
department said it was not possible to predict how many transfers of
property between civil partners might occur in a year, or how much this
property would be worth.
However, an official said that, like income tax
costs, it was likely to be “comparatively low”.
The legislation
also has implications for cohabiting couples – both same-sex and
opposite-sex – who choose not to get married or register a civil
partnership.
While the legislation provides these cohabiting
couples with a new redress scheme in the event of death or a break-up in
the relationship, it does not give them marriage-like income tax
privileges.
As a result, cohabiting couples will continue to be
taxed as single people, and unused credits and standard rate bands
cannot be transferred between cohabitants.
The redress scheme is
aimed at providing legal protection for long-term cohabiting couples and
provides safeguards for an economically dependent cohabitant.
This
involves a number of tax changes.
For example, where one of the former
cohabitants is granted redress by the courts through the transfer of
property, the legislation means this transaction will not now be liable
to stamp duty.
It will also mean the donor of the property will not have a capital gains tax liability on the transfer of that property.
Previously,
the former cohabiting couple would have been deemed as unconnected and
subject to full capital acquisitions tax, stamp duty and capital gains
tax.
The legislation also provides for income tax relief for
maintenance payments made to a financially dependent former cohabitant
as ordered by the courts.
The changes introduced under the legislation will be effective for the year of assessment for 2011 and subsequent years.
For
example, if a civil partnership was registered in April 2011 the couple
will be considered for civil partnership income tax treatment from the
date of the registration of the civil partnership and not from the date
of the enactment of this Bill.
This is in line with the position of
people getting married.
In the case of inheritance, gift tax or
stamp duty reliefs for a civil partnership that was registered in April
2011, the entire annual relief will apply and not just an apportionment
from the date of the civil partnership or from the enactment of the
Bill, according to the Department of Finance.
The legislation is scheduled to be heard at committee stage in the Dáil this week and is likely to be enacted shortly.