Dáil Éireann debate -
Tuesday, 30 Nov 1993

Vol. 436 No. 4

Written Answers. - Taxation on Redundancy Lump Sums

Austin Deasy

Question:

97 Mr. Deasy asked the Minister for Finance if his attention has been drawn to the fact that different employees who have negotiated similar redundancy entitlements relating to service in a company (details supplied) in Dublin, are paying different amounts of tax on the same lump sums; if he will have the situation reviewed to ensure equitable and just treatment for all; and if he will make a statement on the matter.

Austin Deasy

Question:

98 Mr. Deasy asked the Minister for Finance if his attention has been drawn to the anomaly which has arisen in relation to the application of the standard capital superannuation benefit to various employees of a company (details supplied) in Dublin and also to the fact that all past service is not being recognised; if his attention has been further drawn to the hardship it is causing to several employees; and if he will review the situation of one of the employees (details supplied) in County Dublin.

Minister for Finance (Mr. B. Ahern)

I propose to take Question Nos. 97 and 98 together.

I have been advised by the Revenue Commissioners that there are a number of reliefs available against the taxation of payments made on termination of an employment. The basic exemption may be increased to an amount called the Standard Capital Superannuation Benefit and it is this latter amount which is at issue in the questions. This exemption is intended to favour long service employees by giving them an exemption equal to a portion of their annual salary based on the number of years service in the office or employment.

The difficulty arises in relation to employees now receiving redundancy payments based on past service with previous companies including a company which went into receivership in September, 1984. The employees concerned terminated their employments in September, 1984 when the original company went into receivership and they received statutory redundancy. In the circumstances the service prior to September, 1984 must be disregarded for the purposes of calculating the Standard Capital Superannuation Benefit as such service would not be regarded as "service in the office or employment" for the purposes of the legislation governing the relief.