asked the Minister for Finance if he is aware that gardaí who have retired had the option of taking a lump sum on retirement and half their salary as pension or of forgoing the lump sum and receiving two-thirds of their salary as pension; and that those who took the larger pension are paying more income tax than the others; if the lump sum awarded in some cases is subject to income tax; and, if not, if he will take steps to provide that the amount of income tax payable on both types of pension is equalised.
Ceisteanna—Questions. Oral Answers (Resumed). - Taxation on Garda Pensions.
28.
The Garda Síochána Pensions Order, 1951—Statutory Instrument 410 of 1951—which introduced new scales of pensions for retiring gardaí provided that members serving on the date of the order had the option referred to by the Deputy.
The income tax payable by gardaí in receipt of pensions at the higher rate is, of course, in the normal way, greater than that payable by those in receipt of pensions at the lower rate.
The lump sum of gratuity payable to those members who elect to take the pension at the lower rate is not regarded as being in the nature of income and, therefore, is not chargeable to income tax. I do not propose taking the steps suggested by the Deputy to increase the income tax payable in this type of case.
I should point out, however, that tax would, in the normal way, be payable on any income realised from the investment of the lump sum. This is a factor that must be taken into account in any comparison of the tax payable on the higher pension with that payable on the lower pension.
Would the Minister state if gardaí when retiring are made aware of the position when they opt for the high rate of pension? When they opt for this pension they are automatically opting for a higher amount of tax to be deducted over a period.
I could not say whether they are made aware of this specifically but I think it is pretty widely known that this is the way pensions on the one hand and lump sums or gratuities on the other hand are treated for income tax purposes.
Would the Minister see that the gardaí are made aware of this, or if this is still the practice?
I will see if it is feasible or necessary to make them aware of this position and, if I decide it is, I will do so.