Separated parents to both lose out

Budget changes regarding tax credits for separated parents could see both the mother and father lose out, it has been revealed.

The Department of Finance admitted the surprise move as it attempted to explain questions arising from Michael Noonan’s financial statement.

The one-parent family tax credit is to be replaced by the single-person child carer credit under changes announced by the finance minister. The existing set-up allows both parents to claim credit of up to €1,650 if they are working and their offspring spent time living with them during the tax year. Under the new system only the primary carer would be eligible for relief.

The upshot of the change could see a situation arise whereby neither parent is eligible if the main carer is not working.

The finance department stood over the move, saying it had been recommended by the Commission of Taxation.

Officials said the current credit was available to anyone looking after a child, even if it was for one night and there was no familial relationship and it was not “sustainable”.

In the case of a separated couple sharing joint custody, either party could be nominated as a primary carer under the new scheme, the finance department said.

However, in the case of there being one primary carer, that person would be the only one eligible for the tax credit.