Dáil Éireann Debate, Wednesday - 22 June 2005
146 Mr. Cregan asked the Minister for Finance if a person in employment with a contribution record aged over 66, but whose employer understands him to be younger, claims the old age pension, if he can pay tax separately on it without it being shown on his tax documents, P60, tax allowance form and so on; and if such a person did not claim it until he was 70, if the arrears he could claim at that stage could be clarified. [21431/05]
View answerI am informed by the Revenue Commissioners that, while PAYE is not deducted at source from pensions paid by the Department of Social and Family Affairs, the tax due on taxable pensions, such as the old age pension, is collected via the PAYE system by way of adjustment of that individual's certificate of tax credits and standard rate cut-off point, that is, the individual's tax credits and standard tax rate cut-off point are reduced to take into account the amount of his or her taxable pensions and-or benefits received.
However, as an alternative to above, the Revenue Commissioners can, if requested, collect the income tax liability on the old age pension directly by way of an annual assessment on the individual through the self-assessment tax system. While the payment of tax under self-assessment is generally by way of an annual lump sum called preliminary tax, the Revenue Commissioners have a scheme whereby preliminary tax due under self-assessment can be paid by way of a direct debit instalment arrangement. The explanatory leaflet CG9, which is available on www.revenue.ie provides more details.
However, under the self-assessment tax system, if the annual tax return is not submitted on time, a late filing surcharge will apply on that income which was not subject to tax deduction under PAYE, whether directly or indirectly.
While the question of time limits and restrictions on claiming arrears of old age pension entitlements is a matter for the Department of Social and Family Affairs, where an individual allows his or her entitlement to an old age pension build up and claims the arrears by way of a lump sum in later years, such arrears of old age pension are taxable in the relevant tax year to which the pension relates rather than the year in which the arrears are paid.
147 Mr. Hayes asked the Minister for Finance if it is lawful to subject the subsistence and mileage allowances of a member of a board of governors of an institute of technology to income tax and PRSI deductions for attendance at board of governors’ meetings. [21365/05]
View answerThe Revenue Commissioners require further information to determine the precise tax treatment of the reimbursement of expenses of travel and subsistence in the specific case giving rise to the Deputy's question. If the Deputy will provide the name and address of the relevant board member and the names of the relevant vocational education committee and institute of technology to my office, such details will be passed on to the Revenue Commissioners who will examine the matter.
On a general note, the Revenue Commissioners inform me that members of the board of governors of an institute of technology are office holders and that the remuneration payable to them in their capacity as office holders is chargeable to tax under what is known as Schedule E and subject to deductions, that is, tax, PRSI and the health contribution as appropriate, at source under the PAYE system.
The payment of expenses to office holders in respect of travel and subsistence is chargeable to tax as an emolument of an office or employment. That said, office holders and employees may claim tax relief on the expenses of travel necessarily incurred in the performance of the duties of their office or employment. This is the reason employers may, within limitations, reimburse without deduction of tax to office holders and employees the expense of travel necessarily incurred in the performance of their duties. For practical purposes, the limitations commonly accepted across all sectors are the Civil Service rates, limits and procedures.
However, I am further informed by the Revenue Commissioners that it is a long established and widely understood principle of tax case law that the expense of travelling to and from an individual's normal place of work is not an expense of travelling necessarily incurred in the performance of the duties of that office or employment. Accordingly, the reimbursement to an office holder or employee of such expenses is taxable and subject to deductions at source, that is tax, PRSI and health levies as appropriate, under the PAYE system.
Having regard to the nature of work of State and other such boards and committees, it is likely that, in most cases, the normal place of work of the members of such boards and committees, in their capacity as members, is the place where the relevant meetings are held and accordingly, if expenses are paid to travel to such meetings, they are taxable.
