Michael Ring (Mayo, Fine Gael)
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225. To ask the Minister for Finance if he will confirm that rent paid by the State to individual landlords for the housing of refugees is tax free; if he will compare this situation to similar payments to hotels, guesthouses, charities, and local community groups; and if he will make a statement on the matter. [16499/24]

Michael McGrath (Cork South Central, Fianna Fail)
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I am advised by Revenue that income received for providing accommodation is usually taxable. However, where rental payments meet the conditions for rent-a-room relief, which is provided for in section 216A TCA, a tax liability may not arise. The relief applies to sums arising to an individual in respect of the letting of a room or rooms in his or her home for residential purposes and the provision of meals or other services in connection with the letting; the status of the tenant is not relevant. The income from such lettings may be exempt from income tax, USC and PRSI where the sums arising in a calendar year do not exceed the annual limit, which is €14,000. This limit applies to the gross payments from the tenant to the individual, rather than the rental profit. If the limit is exceeded, the full amount of the income is liable to tax, USC and PRSI rather than just any excess over €14,000. Rent-a-room relief only applies to individuals and cannot be claimed by companies or other entities.

In certain circumstances, amounts paid by the State for the accommodation of those with temporary protection status may not be liable to tax, USC and PRSI. The Accommodation Recognition Payment (ARP) is a financial contribution for the hosting of Temporary Protection Beneficiaries from Ukraine, which is provided for in Part 2 of the Civil Law (Miscellaneous Provisions) Act 2022 and is currently set at €800 per calendar month. Section 216E Taxes Consolidation Act 1997 (TCA) provides that the ARP shall all not be reckoned in computing income for the purposes of the Income Tax Acts. Section 6 of the 2022 Act provides that the ARP is only payable to individuals. This payment is not payable if there is a rental agreement with the person being hosted.

Income for businesses trading as guesthouses and hotels will be taxable under Case I as the income generally arises in the course of a trade. One of the determining factors in assessing whether income arises in the course of a trade will generally be the frequency of which the property/room is available for occupancy and its usage by guests. For the income to be considered trading income, the property/room would be expected to be available for rent on a frequent and regular basis, rather than on a once-off or occasional basis. Persons who provide guest accommodation on a once-off, casual or occasional basis will not be regarded as carrying on sufficient activity to constitute a trade and will instead be chargeable to income tax under Case IV.

Sections 207 and 208 TCA provide that a body established for charitable purposes is exempt from tax on certain income to the extent that the income is applied solely for those charitable purposes. This may apply to charities receiving payment from the State for housing international protection applicants. A community group may be eligible for exemption under this section if it holds the charitable tax exemption.