The Rent Tax Credit is only available to people who are income tax-compliant, according to the Taoiseach.
Leo Varadkar has been reacting to a Newstalk exclusive, which highlighted the Revenue Commissioners using the credit to pay off overdue bills from 2020.
The measure, announced as part of Budget 2023, is worth up to €500 for a single applicant, and €1000 for a couple.
However, Newstalk has learned Revenue was using it to offset tax liabilities that came about as a result of the Pandemic Unemployment Payment (PUP) and the Temporary Wage Subsidy Scheme (TWSS).
Payments made under these schemes were not subject to income tax or USC at the time.
Revenue had said any tax due as a result of these schemes would be collected over a four-year period through reduced tax credits; however, it has now emerged that Revenue is using the rent tax credit to reduce those bills in some cases.
'Common sense'
The practice had been criticised by members of the opposition, with Sinn Fein's Pearse Doherty calling for a 'common sense' approach to refunding the credit.
Meanwhile, Richard Boyd-Barrett of People Before Profit described the revelations as 'shocking' and 'unacceptable', before calling on the Revenue to reverse decisions made in this regard.
Taxes
Reacting to the news today, Taoiseach Leo Varadkar said, "everyone has to pay their taxes, no matter who you are.
"Whether you earn a lot of money or very little, whether an individual or a company, everyone has to pay their taxes," he said.
"Hundreds of thousands of people renting have claimed the rent tax credit, but it is a tax credit for people who are income tax compliant."
