asked the Minister for Finance if income tax is assessed on social welfare payments in respect of (a) contributory schemes and (b) non-contributory schemes.
Ceisteanna—Questions. Oral Answers. - Social Welfare Payments.
9.
Apart from the children's allowances, which are specifically exempted from income tax under section 354 of the Income Tax Act, 1967, there is no legislative provision to exempt other social welfare benefits or allowances from tax. Strictly speaking, therefore, all social welfare payments in cash, other than the death grant, are in the nature of income and as such would fall to be taken into consideration for tax purposes.
In practice, however, a benefit or allowance is disregarded for tax purposes unless it continues to be paid for a period in excess of one year. Because of the nature of the payments and of the means tests for payment of non-contributory allowances the question of the tax liability of the majority of social welfare payments does not arise.
Is it correct that people living on social welfare benefits or assistance can be taxed in the ordinary way?
The position, technically under the law, is that they can be, but, in practice, because of the exemption limits and so forth, people on non-contributory pensions are not taxed and in so far as persons who may be a receipt of contributory pensions are taxed the tax element invariably arises because they have income other than the contributory pension.
The Minister must be aware that the purpose of this question is as a result of correspondence I have received from people who feel aggrieved about the present situation.
Yes. That usually is the case in most questions about tax.