I am informed by the Revenue Commissioners that the specific facts of each case must be examined to determine whether a specific award under the Employment Equality Act 1998, or the Maternity Protection Act 1994, is taxable or not. However, it has consistently been the view of the Revenue Commissioners that, in general, these types of awards are liable to income tax. This view is based on the wide-ranging provisions of the legislation governing the taxation of income from offices and employments as set out in section 112 of the Taxes Consolidation Act 1997.
In general, the type of awards referred to by the Deputy are payable by employers for breach of employees rights under the respective Acts. Such awards arise as a consequence of holding an office or employment. Therefore, they would generally be regarded as falling within the relevant definitions in the legislation and would be chargeable to income tax.
However, in certain circumstances, where the making of the award is connected with the termination of the employment, the award may be chargeable to tax under the particular rules governing such terminations i.e. section 123 of the Taxes Consolidation Act 1997. In such cases, all or part of the award may be exempted from tax, depending on the amount of the award and the number of years service in the employment. The first €10,160 plus €765 for each year of service is exempted from income tax. This exemption can be increased by a further amount of up to €10,000 where the individual has not previously received a lump sum payment on termination of employment within the previous ten years. I am informed by the Revenue Commissioners that, as the tax due on such awards is collectible through the PAYE system, there are no separate statistics available on the amount of tax levied on such awards since 1998 as requested by the Deputy.
