Paschal Donohoe warned to stay away from Bank of Mum and Dad

Minister for Finance Paschal Donohoe was hit with a wave of complaints over proposals to tax loans from the so-called "Bank of Mum and Dad".

The Department of Finance had said before the budget it planned to tackle family loans by linking them to the best loan interest rate somebody could have secured from a financial institution.

However, the change was withdrawn at the eleventh hour, with the Minister saying it had the potential to “create inconsistencies”.

Records from the Department of Finance detail a flurry of correspondence to the minister from members of the public and Government colleagues late last year.

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Fianna Fáil Senator Timmy Dooley said he had been contacted by "some concerned constituents" about the proposed changes, forwarding what he said was "sample correspondence".

One letter said: “I would have thought that if parents are in a position to assist their children to obtain a home, then that would relieve the Government of its obligation to assist people seeking to house themselves.

“These parents, who are now in their ‘twilight’ years, have worked all their lives and paid their taxes, but now this money will be taxed once again.”

The office of Fine Gael colleague Neale Richmond also wrote seeking clarification on what was intended. An email from Mr Richmond's office said: "I wouldn't be too familiar with this and I'm wondering if you could look into it for us? Would there be a possibility of this being eased in or something of that sort?"

Representations

Multiple representations were also received from the public, with one saying: “Minister, in the name of all that is just and reasonable, what fresh hell is this?! What is it with modern governments that they have this compulsion to meddle in every facet of human society, family life and the individual?”

Another wrote of how they wanted to help their son and that whatever money they had saved came from “getting up early in the morning and working hard”.

They said: “On the political side, ye will be shooting yourselves in both feet with [the] grey-haired segment of society and Fianna Fáil and Fine Gael will be on the opposition benches.

“I don’t fancy voting for Sinn Féin so will have to go for the Independent candidates.”

Another wrote directly to Tánaiste Leo Varadkar and Minister Donohoe saying they were "shocked" by the proposed clampdown.

“This is no way to treat hard-working parents who have been careful to save during their working life for their children, ‘the people who get up early in the morning’,” said the letter, “so disappointed.”

Mr Donohoe's constituency office also received representations about the plans for changes to the Bank of Mum and Dad.

One described the proposal as a “stroke”, saying: “How can you think this is fair? If my husband and myself want to give a loan on money that we have earned and paid tax on to our children, what right have you to charge interest on this money?”

Other complaints and queries from constituents were forwarded to the Department of Finance by the office of Minister Simon Harris, Minister of State Hildegarde Naughton, and from Housing Minister Darragh O'Brien.

The email from Mr O’Brien’s office called for a cap to be introduced so that only very sizable loans would be captured by the change.

Penalises

They said: “I hope you will find a way to get the proposed legislation amended, as it not only penalises the vast number of families who are helping their children purchase houses but it also runs contrary to your objective of opening as may sources of finance as possible for people to acquire houses.”

A spokeswoman for the department said: “The Minister believed greater consideration needed to be given to the proposal. For instance, it was pointed out to him that the proposed drafting had the potential to create inconsistencies as to how it would be applied, with the potential for variation in rates being used.

“In summary, the Minister concluded that the issue was complex and that more time needed to be given to determining whether this change was warranted in the first place and, if it is, to decide on how this issue can be appropriately addressed.”

The spokeswoman said family loans would now be considered by officials from the department and the Revenue Commissioners with a view to recommendations later in the year for consideration by the minister.