Until 6 April 1995, where an individual made an enforceable maintenance payment to an estranged spouse, PRSI contributions, health contribution and employment and training levy were chargeable on the paying spouse's income at the time it is earned and again on the maintenance payments on their receipt by the receiving spouse. In 1994, a review of the treatment of maintenance payments for the purposes of levies and PRSI was undertaken by officials of my Department, the Office of the Revenue Commissioners and the Departments of Social Welfare, Health and Enterprise and Employment.
Following that review it was agreed that the health contribution and the employment training levy should not be imposed on that part of the payer's income which is paid to his or her separated spouse under an enforceable maintenance agreement. The appropriate changes in the law were included in Social Welfare Act, 1995, and had effect from 6 April 1995. This brings the treatment of maintenance payments for the purposes of the levies into line with their treatment in the income tax system.
The review also concluded that there should be no change in the PRSI treatment of maintenance payments. The payment of separate PRSI contributions enables each spouse to build up a social insurance record in their own right, and they can both, in due course, qualify for a pension. Entitlement to a social insurance pension is a valuable right and affords protection to separated spouses. It is, therefore, important for the protection of their individual pension rights that social insurance contributions be made by the recipients of maintenance payments.