Jerry Cowley (Mayo, Independent)
Link to this: Individually | In context

Question 94: To ask the Minister for Finance the reason a person in receipt of invalidity pension, REPS and single farm payment has to have their social welfare invalidity pension payment assessed as income; the income thresholds for such a person; and if he will make a statement on the matter. [32497/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I am informed by the Revenue Commissioners that as a general principle of taxation, as far as possible, income from all sources should be subject to taxation. In line with this principle, social welfare pensions, the single farm payment and, in certain circumstances, REPS are reckonable as income for income tax purposes. Treating these payments as income for income tax purposes is essentially a matter of equity.

Social welfare pensions are taxable under section 19 of the Taxes Consolidation Act 1997 which provides that tax under Schedule E shall be charged in respect of "every public office or employment of profit, and in respect of every annuity, pension or stipend payable out of the public revenue of the State". Social welfare pensions liable to income tax include retirement, old age, widowed, invalidity and blind person's pensions.

The extent, if any, to which taxation actually arises in a given case essentially depends on the level of income that a recipient has in an income tax year. If there is no other income besides a social welfare pension, the basic personal credits in force can be expected in most cases to ensure that there is no tax to be paid on the social welfare income itself. However in cases where an invalidity pension recipient has other taxable income such as single farm payment and REPS, a tax liability may arise. The level of the tax liability will depend on the person's aggregate taxable income as is the position for other tax payers.