Tommy Broughan (Dublin North East, Independent)
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Question 154: To ask the Minister for Finance if he has been briefed by the Revenue Commissioners on the leave and return scheme in respect of an airline (details supplied); if he is considering any legislation in the context of this scheme; and if he will make a statement on the matter. [36669/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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For reasons of taxpayer confidentiality the Revenue Commissioners do not comment on or provide information on individual cases in relation to either businesses or personal taxpayers. However, by way of general information, the following is the position:

The tax code provides for full Income Tax exemption for any statutory redundancy payment made under the 1967 Redundancy Payments Act (the 1967 Act).

The question of whether a payment comes within the 1967 Act is a matter for the Department of Enterprise, Trade and Innovation and the Revenue Commissioners will follow their determination as regards the tax treatment of any payment made under that Act.

For non-statutory lump sums, there is a basic exemption of €10,160 plus €765 for each full year of service. For employees who are not members of an occupational pension scheme, this basic exemption is increased by a further €10,000.

There is an alternative exemption, called the "Standard Capital Superannuation Benefit", which generally gives a more favourable tax exemption for employees with long service and higher-than-average earnings.

If any part of the lump sum is not exempt, there is a further relief, called "top slicing" relief, which ensures that the lump sum is not taxed at a rate higher than the employee's average rate of tax for the three years prior to termination

The question of whether tax relief is available on non-statutory lump sums is a matter for the Revenue Commissioners. Whether a lump sum qualifies on the basis that it is made in connection with a genuine termination, change of function or commutation of pay will depend on all of the particular facts and circumstances of an individual case.

There is no "template" for such arrangements. If the Revenue Commissioners are asked to approve the proposed tax treatment of redundancy or change of function arrangements, or if the tax treatment of such arrangements is audited by Revenue, all of the facts, not just the contractual arrangements, will be looked at to determine the true nature of the payments.

In some instances, businesses do approach the Revenue Commissioners in advance about particular redundancy packages, but there is no obligation to do so. Where they do, the Revenue Commissioners will give a view based on the facts as disclosed, which is open to review when all the facts are known.