Response received from Minister Noonan further to a Parliamentary Question Laid Down on the issue of the taxation of pensioners19th January 2012
To ask the Minister for Finance if he will confirm the social protection payments that are considered as earnings for tax purposes and on which an individual may be liable for tax if receiving income from any other source; and if it is the intention of the Revenue Commissioners to pursue these social welfare recipients for tax on these payments- Michael Lowry.
* For WRITTEN answer on Tuesday, 17th January, 2012.
Ref No: 2145/12
Aside-Does the Minister expect the revenue to look for back tax for previous years for those pensions who underpaid tax?
Minister for Finance Mr Noonan: (in taking questions 129, 131 and 140 together)
I am informed by the Revenue Commissioners that the data in question was supplied by the DSP to Revenue and at the end of November 2011, Revenue advised my Department that the aggregate amount of additional tax likely to be collected from the exchange of pensions data from the DSP to Revenue and other compliance activities with the DSP was so material that we could factor it in to the Budget arithmetic and an estimated amount of €45 million for 2012 and €55 million for a full year was included in the Summary of 2012 Budget and Estimates Measures in that regard. I am further advised that until that relevant data is analysed in more detail, it is not possible to say how much will be recovered for the Exchequer.
I am informed by the Revenue Commissioners that the main Social Protection payments that are taxable include:
· State Pension (Contributory)
· State Pension (Non-Contributory)
· State Pension (Transition)
· Illness Benefit
· Invalidity Pension
· Occupational Injury Benefit
· Interim Disability Benefit
· Disablement Benefit (when payable in the form of pension rather than as a one off payment)
· Death Benefit Pension
· Widow/er’s or Surviving Civil Partner’s (Contributory) Pension
· Widow/er’s or Surviving Civil Partner’s (Non-Contributory) Pension
· Deserted Wife’s Benefit
· Deserted Wife’s Allowance
· Prisoner’s Wife’s Allowance
· One-Parent Family Payment (Unmarried parent, Separated Spouse, Prisoner’s Spouse)
· Guardian’s Payment (Contributory)
· Guardian’s Payment (Non-Contributory)
· Carer’s Allowance
· Carer’s Benefit
· Jobseeker’s Benefit and Short-Term Enterprise Allowance, excluding Jobseeker’s Benefit paid to systematic short-term workers.
· Unemployability Supplement (payable with Disablement Pension)
· Blind Pension
In the case of illness benefit, interim disability benefit and occupational injury benefit any child dependent element is exempt from tax. Up to and including the 2011 tax year the first 36 days injury benefit, interim disability benefit and occupational injury benefit were exempt from tax. However, with effect from 1 January 2012 this exemption no longer applies to interim disability benefit and occupational injury benefit.
The first €13 per week of jobseeker’s benefit and short-term enterprise allowance is exempt from tax.
Regarding this issue of the pursuit of back tax on the payment details recently provided to Revenue by the DSP, I am informed by the Revenue Commissioners that their normal approach to compliance is to put the right arrangements in place on a current year basis and to focus the attention of compliance staff on the cases which represent the greatest risk. By law, Revenue cannot go back more than four years except in cases where fraud or negligence is involved. I am further informed that as part of Revenue’s day-to-day compliance strategy they regularly take a group of cases, analyse them and on the basis of that analysis devise a policy for other cases in the same sector. Revenue’s approach in these DSP pension cases will be no different. Accordingly, as soon as possible Revenue will examine in detail the 2,500 largest cases where there is a mismatch between Revenue’s own records and the DSP record, and where there is non-DSP income of €50,000 or more. In addition, they will be examining the nature of the information continuing to be received from those pensioners who are contacting Revenue. This analysis will inform their approach to this project thereafter.