The Court of Appeal has ruled that a taxpayer could not deduct the Non-Principal Private Residence (NPPR) charge on six rental properties from rental income for income tax purposes.
In a judgment delivered on 19 October 2017, Mr Justice Gerard Hogan allowed an appeal by the Revenue Commissioners and answered in the negative the question referred to the court: whether the charge was deductible under section 97(2) of the Taxes Consolidation Act 1997 as “any rate levied by a local authority”.
The case concerned the 2009 tax year. Thomas Collins had paid €200 for each of six properties, totalling €1,200, and claimed that amount against rental income. An Appeal Commissioner accepted the claim in 2013. In 2016, the High Court, in a case stated from the Appeal Commissioners, answered the legal question in the taxpayer’s favour. Revenue appealed that decision.
The Court of Appeal said the NPPR charge was introduced by the Local Government (Charges) Act 2009 to help fund local services, with the proceeds retained by local authorities. But the Oireachtas set the charge in legislation, and local authorities had no power to decide whether to impose it or to set or vary its amount. The statute reserved the power to revise the amount to the Minister.
The court said the relevant requirement was that a deductible sum relate to a rate “levied by a local authority”. It considered that “to levy” would ordinarily mean to impose or raise a charge. Because the NPPR charge was imposed by statute and local authorities had no role in determining it, the court concluded that it had not been levied by a local authority. The deduction claim therefore failed.
Collins’s counsel also argued that the provision should be interpreted in light of the presumption against double taxation. The court rejected that submission, reasoning that the NPPR charge related to property while the 1997 Act tax was on income, so double taxation did not arise.
The ruling determined the appeal and the question stated to the court. The judgment noted that several other cases were awaiting the outcome of the appeal. It did not decide whether the NPPR charge might otherwise qualify as a “rate”; that issue was unnecessary to the decision.