Terence Flanagan (Dublin North East, Fine Gael)
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Question 238: To ask the Minister for Finance the implications for lump sums in relation to the levy he introduced in the supplementary budget on 7 April 2009; and if he will make a statement on the matter. [30151/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The position is that income levy is charged on an individual's aggregate income for a tax year. Aggregate income includes lump sums, both bonus payments and retirement lump sums. In the case of retirement lump sums only that part of the lump sum which is liable to income tax is subject to the income levy.

The supplementary budget increased the rates of income levy. These increased rates apply to a person's aggregate income for the year 2009 as a whole. However, in recognition of the fact that persons who were in receipt of termination lump sum payments in the period 1 January 2009 to 30 April 2009 had already paid income levy at the rates originally announced in the budget on 14 October 2008, the supplementary budget and subsequent Finance Act 2009 provided that the levy payable on such lump sums would remain unchanged. If, however, the annualised increased rates of income levy give a more favourable result those affected may elect for the annualised rates to apply. This treatment does not apply to bonus payments, or retirement lump sums paid on or after 1 May 2009.