Vol. 458 No. 1
61 Mr. O'Leary asked the Minister for Finance the plans, if any, he has to introduce legislation which would allow the Pretty Polly Enterprise Fund in Killarney to be exempted from tax, in view of the need to maintain this fund at £300,000 gross having regard to the serious unemployment situation in the Killarney area. [16591/95]
As the Deputy will be aware, arising from the closure of the Pretty Polly factory in Killarney the workers received statutory redundancy payments, which are exempt from tax, and redundancy payments from the firm. The latter payments are subject to income tax to the extent to which they exceed the basic tax-free element applying to redundancy payments i.e. first £6,000 (increased to £10,000 in certain circumstances) plus £500 per completed year of service in the employment. In addition the firm has put aside a £300,000 enterprise fund from which grants are available to redundant Pretty Polly workers who start their own enterprise.
Under the tax code any such grants-additional payments from an enterprise fund, being funded by a former employer, are treated as part of the firm's overall redundancy package and are taxed as part of the ex-worker's redundancy payment. This practice has been applied to other redundancy situations. The money provided for such enterprise funds is an integral part of a firm's overall redundancy package and must be so treated for tax purposes. This position was confirmed to representatives of Pretty Polly in response to inquiries on this matter in August, 1994. Exempting such payments from tax could lead, in general, to taxable redundancy payments being substituted, at least in part, by non-taxed grants. This would increase the Exchequer's already significant financing of redundancies through the existing tax exemptions element applying to such payments.
In the circumstances I have no plans to alter the existing method of taxing payments from an enterprise fund being funded by a former employer.
