Tuesday, 28 April 2009
Dáil Eireann Debate
147. Deputy Richard Bruton asked the Minister for Finance if he has had inquiries from members of the public regarding changes in the tax treatment of retirement lump sums; and if he plans to make clear his policy in this area in order that people can make these important decisions for their lives on an informed basis. [16546/09]
151. Deputy Simon Coveney asked the Minister for Finance if there are proposals to change the system of taxation of retirement lump sum payments; and if he will make a statement on the matter. [16592/09]
The position is that under statutory pension schemes and pension schemes approved by the Revenue Commissioners, there is no liability to income tax in respect of retirement gratuities or lump sums paid to members of such schemes on retirement. Provided members of such schemes and any lump sum payments comply with Revenue rules in this area, there is no liability to income tax on the retirement lump sum payment. In this regard, it should be noted that the tax arrangements for retirement lump sums apply in respect of pension schemes in both the public and private sectors.
As I mentioned in my budget speech on 7 April last, the Commission on Taxation is examining various aspects of pension tax treatment, including the treatment of retirement lump sum payments and I expect to be dealing with the Commission’s recommendations in the 2010 budget in December.
148. Deputy Richard Bruton asked the Minister for Finance his views on introducing a differential rate of tax on rental income instead of the restriction on the allowability of interest payments; and the arguments that led him to choose the restriction on interest as opposed to other measures that might have raised extra taxation from this sector. [16547/09]
Minister for Finance (Deputy Brian Lenihan): As part of the normal lead-up to the budget, an examination of tax incentive schemes and tax reliefs is undertaken in the context of the ongoing development of budgetary and economic policy. Arising from an examination of the various schemes which provide tax relief for rental income properties, I decided to reduce the interest relief from 100% to 75% as a deductible expense in calculating income tax on rental income from residential properties. This is part of the process of unwinding tax expenditure in this area. I have also asked the Commission on Taxation to investigate options in this area, which I plan to return to in the near future.
|Last Updated: 07/10/2010 14:22:51||Page of 312|