Section 126 Tax treatment of certain benefits payable under Social Welfare Acts

Source

Taxes Consolidation Act 1997 section 126.

(1) In this section-

“the Acts” means the Social Welfare Acts;

“the Act of 2005” means the Social Welfare Consolidation Act 2005.

(2)(a) This subsection shall apply to the following benefits payable under the Acts-

(i) widow’s (contributory) pension,

(ii) orphan’s (contributory) allowance,

(iii) retirement pension, and

(iv) old age (contributory) pension.

(b) Payments of benefits to which this subsection applies shall be deemed to be emoluments to which Chapter 4 of Part 42 applies.

(2A) (a) This subsection shall apply to the following benefits payable on or after 1 July 2013 under the Acts-

(i) maternity benefit,

(ii) adoptive benefit, and

(iii) health and safety benefit.

(b) Amounts to be paid on foot of the benefits to which this subsection applies shall be deemed-

(i) to be profits or gains arising or accruing from an employment (and accordingly tax under Schedule E shall be charged on every person to whom any such benefit is payable in respect of amounts to be paid on foot of such benefits, and tax so chargeable shall be computed under section 112(1)), and

(ii) to be emoluments to which Chapter 4 of Part 42 applies.

(2B) Notwithstanding the provisions of section 112(1), where an increase in the amount of a pension to which section 112, 113, 117 or 157, as the case may be, of the Social Welfare Consolidation Act 2005 applies is paid in respect of a qualified adult (within the meaning of the Acts), that increase shall be treated for all the purposes of the Income Tax Acts as if it arises to and is payable to the beneficiary referred to in those sections of that Act.

(3)(a) This subsection shall apply to the following benefits payable under the Acts-

(i) disability benefit,

(ii) unemployment benefit,

(iii) injury benefit which is comprised in occupational injuries benefit, and

(iv) pay-related benefit.

(b) Amounts to be paid on foot of the benefits to which this subsection applies (other than amounts so payable in respect of a qualified child within the meaning of section 2(3) of the Social Welfare Consolidation Act 2005)shall be deemed-

(i) to be profits or gains arising or accruing from an employment (and accordingly tax under Schedule E shall be charged on every person to whom any such benefit is payable in respect of amounts to be paid on foot of such benefits, and tax so chargeable shall be computed under section 112(1)), and

(ii) to be emoluments to which Chapter 4 of Part 42 is applied by section 984.

(c)(i) In this paragraph “short-time employment” has the same meaning as it has for the purposes of the Acts.

(ii) Notwithstanding paragraphs (a) and (b) and the Finance Act 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order 1994 (S.I. No. 19 of 1994), paragraph (b) shall not apply in relation to unemployment benefit paid or payable, to a person employed in short-time employment.

(4)(a) In this subsection, “income tax week” means one of the successive periods of 7 days in a year of assessment beginning on the 1st day of that year, or on any 7th day after that day, and the last day of a year of assessment (or the last 2 days of a year of assessment ending in a leap year) shall be taken as included in the last income tax week of that year of assessment.

(b) Notwithstanding subsection (3), the first €13 of the aggregate of the amounts of unemployment benefit payable to a person in respect of one or more days of unemployment comprised in any income tax week (other than an amount so payable in respect of a qualified child within the meaning of section 2(3)(a) of the Social Welfare (Consolidation) Act, 1993) shall be disregarded for the purposes of the Income Tax Acts.

(6)(a) Subsection (3) shall come into operation on such day or days as may be fixed for that purpose by order or orders of the Minister for Finance, either generally or with reference to any particular benefit to which that subsection applies, or with reference to any category of person in receipt of any particular benefit to which that subsection applies, and different days may be so fixed for different benefits or categories of persons in receipt of benefits.

(6A) A payment which is-

(a) described in column (1) of the Table to this section,

(b) paid on the basis specified in column (2) of that Table, and

(c) made by the Minister for Employment Affairs and Social Protection to an individual on or after 1 January 2019,

Shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.

(b) Where an order is proposed to be made under this subsection, a draft of the order shall be laid before Dáil Éireann, and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann.

(6B) A payment which—

(a) is described in column (1) of the Table to this section,

(b) is paid on the basis specified in column (2) of that Table, and

(c) was made by the Minister for Employment Affairs and Social Protection to an individual before 1 January 2019,

shall be treated as if it was exempt from income tax in the year of assessment to which it relates and shall not be reckoned in computing income for the purposes of the Income Tax Acts.

Amendments

Finance Act 2018 section 13 (b).

(7)

Amendments

Finance Act 2018 section 13 (c).

(8)

Amendments

Finance Act 2007 section 10(c).

 

Table

Description of payment (1) Basis on which payment was made (2)

Basic supplementary welfare allowance

Section 189 of the Act of 2005

Back to education allowance

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Back to education allowance’

Back to work enterprise allowance

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Back to work enterprise allowance’
Back to school clothing and footwear allowance A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Back to school clothing and footwear allowance’

Carer’s support grant

Section 225 of the Act of 2005

Constant attendance allowance

Section 78 of the Act of 2005

Death benefit – funeral expenses

Section 84 of the Act of 2005

Death benefit – orphans

Section 83 of the Act of 2005

Direct provision allowance

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Direct provision allowance’
Disability allowance Section 210 of the Act of 2005

Disablement gratuity

Section 75(8) of the Act of 2005
Domiciliary care allowance Section 186F of the Act of 2005
Exceptional needs payment Section 201 of the Act of 2005

Farm assist

Section 214 of the Act of 2005

Fuel allowance

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Fuel allowance’

Guardian’s payment (contributory)

Section 130 of the Act of 2005

Guardian’s payment (non-contributory)

Section 168 of the Act of 2005
Household benefit package A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Household benefit package’

Humanitarian assistance payment

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Humanitarian assistance payment’

Jobseeker’s allowance

Section 141 of the Act of 2005

Jobseeker’s transitional payment

Section 148A of the Act of 2005

Medical care

Section 86 of the Act of 2005

Part-time job incentive scheme

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Part-time job incentive scheme’

Rent allowance

Section 23 of the Housing (Private Rented Dwellings) Act 1982

Supplementary welfare allowance

Section 198 of the Act of 2005

Telephone support allowance

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Telephone support allowance’

Training support grant

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Training support grant’

Urgent needs payment

Section 202 of the Act of 2005

Widowed or surviving civil partner grant

Section 137 of the Act of 2005
Working family payment Section 228 of the Act of 2005
Youth employment support scheme A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Youth employment support scheme’

Amendments

Finance Act 2001 section 2(3)

Finance Act 2002 section 138.

Finance Act 2013 section 8(b).

Finance Act 2007 section 10(c).

Finance Act 2018 section 13 (d).