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Dáil Éireann debate -
Thursday, 5 Mar 1998

Vol. 488 No. 3

Written Answers - Taxable Social Welfare Benefits.

Noel Ahern

Question:

72 Mr. N. Ahern asked the Minister for Finance the years when social welfare payments, for example, old age pension, invalidity pension, unemployment benefit and disability benefit, first became liable for income tax purposes; and if 100 per cent was liable from year one or if it was introduced in phases. [6074/98]

As the Deputy is aware the majority of social welfare payments are reckonable as income for tax purposes. Apart from the specific payments mentioned in the followng paragraph, all taxable social welfare payments fall within the provisions of Schedule E of the Taxes Consolidation Act, 1997, previously the Income Tax Act, 1967, and before that, the Income Tax Act, 1918. Consequently, the majority of social welfare payments have been taxable in the State from the date on which the payments were introduced.

Disability benefit — DB — and occupational injury benefit became reckonable as income for tax purposes with effect from 6 April 1993, and unemployment benefit — UB — and pay-related benefit with effect from 6 April 1994. The normal practice is that taxation applies in full to a payment from the date from which it becomes liable to tax. However, in order to improve the position of those adversely affected by extending taxation to DB and UB, certain changes have since been introduced. To assist families, the child dependant additions payable with both DB and UB were exempted from income tax from 6 April 1995. The first £10 per week of UB was disregarded for tax purposes also from 6 April 1995. In the context of Partnership 2000 it was agreed that the first three weeks of DB in a tax year would be exempt from tax from 6 April 1997 and the first six weeks from 6 April 1998.

Some social welfare payments are not liable to tax. The following payments are not taxable:

Unemployment Assistance
Pre-Retirement Allowance
Smallholders Unemployment Assistance
Disability Allowance
Supplementary Welfare Allowance
Family Income Supplement
Back to Work Allowance
Child Benefit
Maternity Benefit.
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