Dáil Éireann díospóireacht -
Tuesday, 8 Apr 1997

Vol. 477 No. 2

Written Answers - Tax Reliefs.

Dermot Ahern

Ceist:

57 Mr. D. Ahern asked the Minister for Finance the plans, if any, he has to change the regulations governing the PAYE tax system in relation to employees in receipt of short-term disability benefit during and after absence from work due to illness in view of the fact that in some instances, but particularly in circumstances where employees are not paid directly by the company while out sick, employees are having difficulties paying periodic payment during their absence from work, mainly because their tax allowances are not apportioned during that period; and if he will make a statement on the matter. [8780/97]

Minister for Finance (Mr. Quinn)

The Finance Bill, in line with the commitment in Partnership 2000, provides for the first three weeks of disability benefit payments in the tax year 1997-98, and the first six weeks from 1998-99 tax year onwards, being disregarded for tax purposes. Child dependant additions payable with disability benefit are already disregarded for tax purposes since 6 April 1995.

The exemption period should cover the majority of absences by employees.

I am informed by the Revenue Commissioners that during the tax exemption period no adjustments for tax purposes are required and the cumulative system of PAYE continues unchanged.

If an employee is out of work due to illness after the exemption period expires the cumulative basis of PAYE can be maintained either by the employer including the disability benefit as notional earnings on the tax deduction card and continuing the normal cumulative basis of PAYE or by the employee notifying the tax office to have his-her tax-free allowance restricted by the taxable amount of disability benefit. The revised tax-free allowance will then be issued on a cumulative basis.