Dáil Éireann Debate, Tuesday - 16 April 2013
225. Deputy Olivia Mitchell asked the Minister for Finance if he will clarify the impact the tax change on maternity benefit will have on the maternity benefit of women who receive no top-up from the employer and are dependent solely on statutory maternity benefit. [16167/13]
View answerAs a result of maternity benefit payments becoming liable to income tax for all claimants, from 1 July 2013, a number of possible tax outcomes could arise:
1. An individual may pay no income tax on their maternity benefit payment as their tax credits will be sufficient to reduce their tax liability to zero.
2. An individual may pay income tax on some or all of their maternity benefit payment solely at the standard rate.
3. An individual may pay income tax at the standard rate on a portion of the maternity benefit and the higher rate on the balance of the maternity benefit payment.
4. An individual may pay income tax on their maternity benefit payment at the higher rate.
The extent, if any, to which taxation actually arises in a given case depends on the level of income that a recipient has in a tax year. If there is no other income besides the social welfare payment, the basic personal credits in force can be expected, in most cases, to ensure that no tax arises on the social welfare income itself, provided the credits have not been transferred to a husband or civil partner.
Accordingly, the tax liability on maternity benefit payments will ultimately depend on the total income of the individual or couple concerned in the tax year or years concerned.
I would point out though, that maternity benefit payments will remain exempt from Universal Social Charge and PRSI.
