Joan Burton (Dublin West, Labour)
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Question 188: To ask the Minister for Finance if he will explain the tax treatment of redundancy payments, particularly with regard to the income levy; and if he will make a statement on the matter. [15396/09]

Pat Breen (Clare, Fine Gael)
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Question 209: To ask the Minister for Finance if he will clarify the way the recent increases in the income levy will be applied; if it will apply to compulsory and voluntary redundancy payments; if so, if he has plans to reverse this decision; and if he will make a statement on the matter. [15821/09]

Jack Wall (Kildare South, Labour)
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Question 210: To ask the Minister for Finance if a person who took voluntary redundancy at the end of December 2008 will be subject to the income levy rates; and if he will make a statement on the matter. [15853/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 188, 209 and 210 together.

The position is that statutory redundancy payments are exempt from both income tax and income levy.

In addition, ex-gratia redundancy payments in excess of the statutory redundancy amount are exempt from income tax and the income levy, subject to certain limits, namely - · a basic exemption of €10,160 plus €765 per complete year of service in excess of statutory redundancy; or · if more beneficial, the Standard Capital Superannuation Benefit, which is 1/15th of the person's annual income (average of the last three years) for each year of employment less any tax-free lump sum which is received or receivable under any approved or statutory pension scheme.

The basic exemption from income tax and income levy as outlined above can be further increased by up to €10,000 if the person is not a member of an occupational pension scheme. This can only be claimed if the person has not made any claim in respect of a lump sum received in the previous 10 tax years.

The amount of redundancy payment in excess of whichever exemption applies is liable to both income tax and income levy. The income levy rates announced in the Supplementary Budget, namely, 1.67% on the first €75,036, 3% on the next €25,064, 3.33% on the next €74,880, 4.67% on the next €75,140 and 5% on the remainder, apply to the whole of a person's 2009 income.

With regard to an individual who took voluntary redundancy at the end of December and received the termination or lump sum payment associated with that redundancy before 1 January 2009, the person will not be liable to the income levy on that payment. However if the termination payment was actually made on any date on or after 1 January 2009, then the person is liable to the income levy on that payment on the basis set out above.

The treatment of taxable redundancy payments paid prior to 1 May will be considered in the context of the preparation of the forthcoming Finance Bill.