Dáil Éireann Debate, Tuesday - 12 June 2018
201. Deputy Róisín Shortall asked the Minister for Finance the rationale for the taxation of maternity benefit; his views on whether the taxation creates an unfair burden on single income households in which a new mother has ceased working in order to spend time with her child; and if he will make a statement on the matter. [24474/18]
Amharc ar fhreagraIt is my view that the tax treatment of Maternity Benefit payments does not create any additional burden on single income households as the Deputy has suggested.
It is a general principle of Irish taxation that, as far as possible, income from all sources should be subject to tax. As a result, the majority of social welfare payments are deemed as taxable for income tax purposes. Consistent with this approach, the charge to income tax on Maternity Benefit payments applies to ensure that those with identical incomes will be treated the same for income tax purposes.
The extent to which taxation actually arises, if at all, in a given case depends on the total level of income that the individual or couple concerned has in the relevant period. In circumstances where the Maternity Benefit is paid in lower income households, such mothers will likely not have to pay any income tax as their tax liability would not be higher than the amount sheltered by their personal tax credits. This is most likely to be the case in circumstances where social welfare payments are the only source of income for a household.
In addition, recognising that such payments have an important purpose to support women on Maternity Leave from work, Maternity Benefit payments are exempt from Universal Social Charge and PRSI.
