Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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Question 192: To ask the Minister for Finance the amount refunded in 2006 and 2007 by the Revenue Commissioners in overpaid income tax as a result of the failure of employers to recognise the exemption from income tax liability of maternity benefit; the number of taxpayers repaid; the corresponding figures to date in 2008; the steps being taken to ensure that employers comply with this exemption; and if he will make a statement on the matter. [22909/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that the information requested (regarding the amount refunded in 2006, 2007 and 2008 in overpaid income tax and the associated number of taxpayers repaid as a result of the failure of employers to recognise the exemption from income tax liability of maternity benefit) cannot be provided. This is because the PAYE system does not identify the reason giving rise to a review of an individual's tax liability, rather it is the outcome of the review that is recorded — for example, whether an overpayment or underpayment of tax arises or whether an additional tax credit or allowance should be granted.

I am further informed that payroll arrangements in operation while an employee is on maternity leave and in receipt of maternity benefit may vary depending on particular circumstances and different contracts of employment. Revenue has given guidance to employers (in Chapter 7 of the Employer's Guide to PAYE) on the different payment/recovery scenarios involved, including where the employer recovers maternity benefit and continues to pay wages, and the appropriate PAYE treatment in each set of circumstances.

Revenue became aware last year that some employers have been treating maternity benefit incorrectly for taxation purposes. Revenue wrote to the employers concerned (as well as to others that may have been in the same situation): (a) reminding them of the correct PAYE treatment; and (b) requesting details of any employees affected for the years 2003 to 2007 (the years for which, at that stage, a rebate claim was still in time in accordance with section 865 of the Taxes Consolidation Act 1997).

The replies received in response to this initiative are now being examined but further work (including contact with some of the employers) will be needed before any overall picture emerges.