Revenue to use third-party data to allocate tax credits

Collector says accessing personal details is not Big Brother behaviour and will make it easier to give rebates to employees, writes Laura Slattery.

The Revenue Commissioners denied yesterday that its proposed use of social welfare records, trade union membership lists and health insurance data to automatically award tax credits meant it would be acting in a Big Brother fashion.

Information secured from third parties would be used solely for the purpose of giving people the tax credits to which they are entitled, the Revenue said.

"We're trying to encourage people to claim and make it easier for them to claim," the Revenue's spokesman Dave Coleman said.

If PAYE employees do not make a claim for certain tax credits within a reasonable period, the Revenue will use information gleaned from third parties such as employers, trade unions, health insurance providers, the Health Service Executive and third-level colleges to assess if the taxpayer is entitled to the credit.

The Revenue has held initial discussions with the Irish Congress of Trade Unions (Ictu) and other parties and intends to hold more detailed discussions in the coming weeks.

The Revenue estimates that around €100 million in tax breaks goes unclaimed every year as a result of consumer inertia and a lack of awareness about entitlement to particular tax credits.

A spokesman for the Irish Taxation Institute welcomed the measures and said it looked forward to helping the Revenue find concrete ways to help taxpayers claim their entitlements.

Many of the new measures are aimed at people aged 65 and over. People in this age category whose income is less than the age-related annual tax exemption limit - currently €19,000 for a single person and €38,000 for a married couple - will be entitled to receive any interest that they earn on their savings free of Deposit Interest Retention Tax (Dirt) instead of seeing this tax deducted from their savings and then having to make a claim for the refund at the end of the year.

People who are permanently incapacitated and exempt from tax will also be entitled to have their accounts operate free of Dirt. The Revenue receives around 12,000 claims a year for Dirt refunds from people aged 65 and over and people who are permanently incapacitated and gives back around €2.5 million to these claimants.

However, Pat Molan, principal officer at the Collector-General's division, said that many people felt that it was too onerous to make a claim.

The Revenue will do spot checks to ensure that people who certify themselves as eligible for the Dirt exemption are entitled to it, Mr Molan added.

The Revenue will use date of birth information from the Department of Social and Family Affairs to automatically grant to people aged 65 and over the age tax exemption limit and the age tax credit, which is now €275 for a single person and €550 for a married couple.

Where people have made claims for the rent tax credit, the date of birth information will be used to automatically award the higher rate of credit available to tenants aged 55 and over.

The automatic granting of the age-related credits and the use of trade union membership lists to grant the €60 trade union subscription credit will come into effect next year; other measures will be up and running in 2008.

Third-level colleges will be obliged to ask students their PPS numbers and send this data to the Revenue so that it can grant tax relief on tuition fees for approved courses. Tax relief on the cost of prescription drugs will be awarded using data obtained from the Drugs Payment Scheme, which is operated by the Health Service Executive.

The relief on medical expenses not covered by health insurance will be granted by using data provided directly by health insurance providers. It is thought that the relief on these expenses is one of the most common and most valuable tax reliefs to go unclaimed.

The Revenue will also use employers' P35 forms to grant the tax relief on medical insurance to people whose employers pay the premium on behalf. Most people receive the 20 per cent tax relief on health insurance premiums at source. However, employees who are liable to benefit-in-kind tax on an employee benefit have up to now had to make a claim for the relief.

Declan Rigney, who is responsible for customer service policy at the Revenue, said that it was examining other tax credits and reliefs that it could automatically grant to taxpayers. These would include reliefs on nursing home charges and certain dental treatments.

However, automatically awarding the tax credit on refuse charges could prove problematic because of the different fixed-charge and tag systems in operation across the State.