Revenue has updated its guidance on payments arising on termination of an office or employment or removal from an office or employment to reflect the impact of unpaid leave on the calculation of the average taxable emoluments figure for the Standard Capital Superannuation Benefit (SCSB) exemption.
The SCSB exemption is based on average salary for the last 36 months of employment and in some cases, an employee may have taken unpaid leave for a period during the 36-month period prior to employment termination. The guidance explains that salary details from beyond the last 36 months can be used in the SCSB calculation, to determine the average annual taxable emoluments, provided the person didn’t receive any other taxable pay during unpaid leave.
If the individual continued to receive a contribution to a pension scheme and no other emoluments, that period is not treated as unpaid leave for the calculation. The guidance outlines that examples of periods of unpaid leave include unpaid maternity leave, unpaid paternity leave or unpaid parental leave.
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