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

[ITA67 s224(1), (2) and (4); FA71 s12; FA92 s15; FA95 s10(1); FA97 s4]

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(1) In this section, “the Acts” means the Social Welfare (Consolidation) Act, 1993, and any subsequent enactment together with which that Act may be cited.

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(1) In this section “the Acts” means the Social Welfare Acts.

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(1) In this section——

“the Acts” means the Social Welfare Acts;

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

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(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.

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(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,^[19]>and^<[19]

(iii) health and safety ^[20]>benefit.^{<[20][32]>[20]>}benefit, and^{<[20]<[32][32]>}benefit,^<[32]

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(iv) paternity ^[33]>benefit.^<[33][33]>benefit, and^<[33]

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(v) parent’s benefit.

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(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.

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(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.

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

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(i) disability benefit,

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(i) illness benefit,

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(ii) unemployment benefit,

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(ii) jobseeker’s benefit,

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(iia) jobseeker’s benefit (self-employed),

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(iib) the payments, commonly known as the pandemic unemployment payments, made under section 202 of the Act of 2005 on and after 13 March 2020 to the relevant date (within the meaning of section 7 of that Act),

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(iic) Covid-19 pandemic unemployment payment (within the meaning of the Act of 2005),

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(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 ^[12]>section 2(3)(a) of the Social Welfare (Consolidation) Act, 1993)^<[12][12]>section 2(3) of the Social Welfare Consolidation Act 2005^<[12] 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

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

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(ii) except in the case of amounts so payable in respect of jobseeker’s benefit (self-employed), to be emoluments to which Chapter 4 of Part 42 is applied by section 984.

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(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 ^[30]>unemployment benefit^<[30][30]>jobseeker’s benefit or jobseeker’s benefit (self-employed)^<[30] paid or payable, to a person employed in short-time employment.

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(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 ^[6]>£10^<[6][6]>€13^<[6] of the aggregate of the amounts of ^[31]>unemployment benefit^<[31][31]>jobseeker’s benefit or jobseeker’s benefit (self-employed)^<[31] 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.

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(5) Notwithstanding subsection (3), the aggregate of the amounts of disability benefit, injury benefit or both disability benefit and injury benefit payable to a person in respect of—

(a) for the year of assessment 1997-98, the first 18 days, and

(b) for the year of assessment 1998-99 and subsequent years of assessment, the first 36 days,

incapacity for work for which the person is entitled to payment of either disability benefit or injury benefit shall be disregarded for the purposes of the Income Tax Acts.

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(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.

(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.

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“(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.

(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.”

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(7) ^[5]>(a) The Revenue Commissioners may, in order to provide for the efficient collection and recovery of any tax due in respect of benefits to which subsection (3) applies, make regulations modifying the Income Tax (Employment) Regulations, 1960 (S.I. No. 28 of 1960), in their application to those benefits, the employees in receipt of those benefits, the tax-free allowances appropriate to such employees, and employers of such employees or certificates of tax-free allowances or tax deduction cards held by employers of such employees in respect of those employees.^<[5]

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(b) Without prejudice to the generality of paragraph (a), regulations under that paragraph may include provision for the reallocation by the Revenue Commissioners (without the issue of amended notices of determination of tax-free allowances, amended certificates of tax-free allowances or amended tax deduction cards) of the tax-free allowances appropriate to employees between the benefits to which subsection (3) applies and other emoluments receivable by them.

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(a) The Revenue Commissioners may, in order to provide for the efficient collection and recovery of any tax due in respect of benefits ^[17]>to which subsection (3) applies^<[17][17]>to which subsections (2A) and (3) apply^<[17], make regulations modifying the ^[8]>Income Tax (Employments) Regulations, 1960 (S.I. No. 28 of 1960)^<[8][8]>Income Tax (Employments) (Consolidated) Regulations 2001 (S.I. No. 559 of 2001)^<[8], in their application to those benefits, the employees in receipt of those benefits, the reliefs from income tax appropriate to such employees, and employers of such employees or certificates of tax credits and standard rate cutoff point or tax deduction cards held by employers of such employees in respect of those employees.

(b) Without prejudice to the generality of paragraph (a), regulations under that paragraph may include provision for the reallocation by the Revenue Commissioners (without the issue of amended notices of determination of tax credits and standard rate cut-off point, amended certificates of tax credits and standard rate cut-off point and amended tax deduction cards) of the reliefs from income tax appropriate to employees between the benefits ^[17]>to which subsection (3) applies^<[17][17]>to which subsections (2A) and (3) apply^<[17] and other emoluments receivable by them.

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(c) Every regulation made under this subsection shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

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(8) (a) In this subsection, “short-time employment” has the same meaning as it has for the purposes of the Social Welfare Acts, but also includes an employment referred to in section 79(2)(b) of the Social Welfare (Consolidation) Act, 1993.

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(b) Notwithstanding subsection (3) and the Finance Act, 1992 (Commencement of Section 15)(Unemployment Benefit and Pay-Related Benefit) Order, 1994 (S.I. No. 19 of 1994), subsection (3)(b) shall not apply as respects the year of assessment 1997-98 in relation to unemployment benefit paid or payable to a person employed in short-time employment.

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(b) Notwithstanding subsection (3) and the Finance Act, 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order, 1994 (S.I. No. 19 of 1994), subsection (3)(b) shall not apply as respects the years of assessment 1997-98 and 1998-99 in relation to unemployment benefit paid or payable to a person employed in short-time employment.

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(b) Notwithstanding subsection (3) and the Finance Act, 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order, 1994 (S.I. No. 19 of 1994), subsection (3)(b) shall not apply in relation to unemployment benefit paid or payable in the period commencing on the 6th day of April, 1997, and ending on the 5th day of April, 2000, to a person employed in short-time employment.

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(b) Notwithstanding subsection (3) and the Finance Act, 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order, 1994 (S.I. No. 19 of 1994), subsection (3)(b) shall not apply in relation to unemployment benefit paid or payable in the period commencing on 6 April 1997, and ending on 5 April 2001, to a person employed in short-time employment.

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(b) Notwithstanding subsection (3) and the Finance Act, 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order, 1994 (S.I. No. 19 of 1994), subsection (3)(b) shall not apply in relation to unemployment benefit paid or payable, in the period commencing on 6 April 1997 and ending on 31 December 2001, to a person employed in short-time employment.

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(b) Notwithstanding subsection (3) and the Finance Act, 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order 1994 (S.I. No. 19 of 1994), subsection (3)(b) shall not apply in relation to unemployment benefit paid or payable, in the period commencing on 6 April 1997 and ending on 31 December 2002, to a person employed in short-time employment.

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(b) Notwithstanding subsection (3) and the Finance Act 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order 1994 (S.I. No. 19 of 1994), subsection (3)(b) shall not apply in relation to unemployment benefit paid or payable, in the period commencing on 6 April 1997 and ending on 31 December 2004, to a person employed in short-time employment.

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(b) Notwithstanding subsection (3) and the Finance Act 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order 1994 (S.I. No. 19 of 1994), subsection (3)(b) shall not apply in relation to unemployment benefit paid or payable, in the period commencing on 6 April 1997 and ending on 31 December 2006, to a person employed in short-time employment.

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TABLE

Description of payment (1)	Basis on which payment is 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 [37]> (other than the payments referred to in subsection (3)(a)(iib)) <[37]	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’

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