Michael McGrath (Cork South Central, Fianna Fail)
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I assume the Deputy is referring to reports in the media that a particular financial institution is to make payments to the holders of offset mortgages. I understand from such media reports that the payments in question may made to the mortgage holders in the context of the removal of an offset facility which may be a feature of their existing mortgage accounts.

I am advised by Revenue that the tax treatment of such payments can only be established by reference to particular facts and circumstances of each case.

Revenue has advised me that the payment of compensation by one party in exchange for another surrendering an existing benefit may be a taxable event, depending on the source and nature of the benefit in question. Should the payment of compensation be considered a taxable event, the nature of the compensation payment itself would need to be determined to establish if it is revenue or capital in nature. The general principles established by legislation, case law and Revenue guidance would then need to be applied to each case based on this analysis, which would then inform the potential income tax, corporation tax or capital gains tax consequences of such payments.

In addition, where a payment is made on an ex gratia basis, it may be a gift for capital acquisitions tax (CAT) purposes.

If the mortgage holders concerned wish to determine the correct tax treatment of these payments, they can present full details of same to Revenue via the "MyEnquiries" online service.