Niall Collins (Limerick County, Fianna Fail)
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80. To ask the Minister for Finance if the lump sum paid to local authority members who retired at the 2014 local elections is taxable; and if he will make a statement on the matter. [6338/16]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that while statutory redundancy payments are exempt from income tax, any additional ex-gratia or termination payments, such as those made to local authority councillors on retirement, are chargeable to tax. Such payments may qualify for the partial exemption provided for in section 201 of the Taxes Consolidation Act 1997(the Act). This exemption is available to any employee in receipt of an ex-gratia payment on redundancy or termination of an office or employment.

Section 201 of the Act provides for the following exemptions:-

- A basic exemption of €10,160 increased by €765 for each full year of service with the employer.

- This basic exemption may be increased by an additional amount of €10,000 where an individual has not made any claims to exemptions in the previous 10 years. If the individual has made any such claims within that period the €10,000 figure is reduced by the value of any tax-free lump sum received. Any tax-free lump sum received or receivable under an occupational pension scheme must also be deducted from the increase to the basic exemption.

- The exemption may be further increased by the amount by which a sum, referred to as the "Standard Capital Superannuation Benefit" (SCSB), exceeds the total value of the exemptions set out above. This amount is calculated by multiplying 1/15th of the individual's annual income, averaged over the last three years, by the number of complete years of service with the employer, and deducting any tax-free lump sum received or receivable under any pension scheme.

It is worth noting that, from 1 January 2011, there is a lifetime cap on exemptions utilised in respect of all gratuities received, irrespective of the source of the gratuity. Therefore a Councillor who received a termination payment from a previous employer will need to provide their Local Authority with details of such payment to ensure the lifetime exemption ceiling of €200,000 is not exceeded.

Full details on the treatment of ex-gratia termination payments are available on the Revenue Commissioners website at .