Brendan Griffin
Question:136. Deputy Brendan Griffin asked the Minister for Finance the circumstances under which redundancy payments are taxable; are tax free; and if he will make a statement on the matter. [36939/15]
View answerThursday, 22 October 2015
Questions (136)
Written answers
Statutory redundancy payments payable under the Redundancy Payments Acts are exempt from income tax. In addition to statutory redundancy, individuals may receive ex-gratia or termination payments on leaving employment. Such payments are chargeable to tax but may qualify for certain exemptions provided for in section 201 of the Taxes Consolidation Act 1997 as follows:
1. A "basic exemption" of €10,160 plus €765 for each full year of actual service with the employer making the payment;
2. This "basic exemption" may be increased by an additional €10,000 where an individual has not made any claims for exemptions in respect of ex-gratia payments received in the previous 10 years. Where the individual is a member of an occupational pension scheme, this additional amount is reduced by the value of any tax-free lump sum received or receivable from the pension scheme; and
3. The exemption may also be increased by the amount by which a sum referred to as the "Standard Capital Superannuation Benefit" (SCSB) exceeds the value of the basic plus the increased exemption. The SCSB amount is calculated by multiplying 1/15th of the person's annual income, averaged over the last three years, by the number of complete years of service with the employer, and deducting any tax-free lump sum which is received or receivable under any pension scheme.
From 1 January 2011, the maximum aggregate lifetime amount that may be paid tax free to any individual in respect of termination(s) of employment is €200,000.
Full details are available on the Revenue Commissioners website at: http://www.revenue.ie/en/tax/it/leaflets/it21.html.