Michael Collins (Cork South-West, Independent Ireland Party)
Link to this: Individually | In context

313. To ask the Minister for Finance to outline, given the difficulties with getting school bus drivers, the reason those willing to drive the school bus and who may have a small pension face a Revenue bill during the summer months when they have to draw down jobseeker’s allowance for seven weeks (details supplied); and if he will make a statement on the matter. [37687/25]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context

Section 126(6A) of the Taxes Consolidation Act 1997 (TCA) provides for the exemption of Income Tax from certain Department of Social Protection (DSP) payments including Jobseeker’s Allowance. However, this exemption does not extend to Jobseeker’s Benefit, which individuals may qualify for, during periods of unemployment. I can confirm that Jobseeker’s Benefit payments are liable to Income Tax, although they are not subject to the Universal Social Charge (USC) or Pay Related Social Insurance (PRSI).

Payments from the DSP are paid gross to the recipient. Where a person in receipt of a taxable payments from DSP also has an additional source of employment or pension income, Revenue collects the tax due by reducing the person’s annual tax credits and rate band by the annual amount of their DSP income. This ensures that the DSP payment is paid gross to the recipient, while the salary or pension, as paid by their employer, will have any tax due on the DSP income deducted from it.

Revenue has confirmed to me that, for employees in receipt of taxable DSP payments (such as Jobseekers Benefit), they are placed on the ‘Week One/Month One Basis’. This means that the tax for each pay period is calculated with reference to the earnings ‘for that pay period only’. This prevents a significant reduction in tax credits that could cause financial hardship to the claimant and ensures that the correct tax is collected for each week the payment is received.

Revenue further advises me that an amended Tax Credit Certificate (TCC) issues to the recipient of the DSP payment, showing these changes on their Revenue record. Revenue makes a revised Revenue Payroll Notification (RPN) available to their employer showing amended total tax credits and rate bands to be used in calculating tax to be collected through the PAYE system.

When Revenue is notified by DSP that the individual is no longer receiving a payment, that individual’s record is updated to reflect the total amount of DSP payments received. An amended TCC issues to the individual and a new RPN will also be made available to their employer reflecting this update. If it is appropriate to do so without causing undue hardship, Revenue will place the individual back on the ‘Cumulative Basis’, which means that for each pay period, all earnings and all tax credits up to that pay date are ‘aggregated’, and the tax due is calculated on a year-to-date basis. This ensures employees pay the correct amount of tax throughout the year.

Revenue has also confirmed to me that at the end of every year, they make a Preliminary End of Year Statement (PEOYS) available to employees. This statement is based on information available and indicates whether the employees tax position is balanced, underpaid, or overpaid for the year. If a taxpayer wishes to claim additional credits; reliefs; or expenses, they will need to complete and submit an Income Tax return for the year. Revenue will then generate a Statement of Liability confirming their final tax position.

Further information on the taxation of DSP payments can be found on the Revenue website at the following link: www.revenue.ie/en/jobs-and-pensions/taxation-of-social-welfare-payments/index.aspx

Should the Deputy require any further clarification, Revenue has advised that he can contact Revenue on its dedicated Oireachtas Helpline. Furthermore, any persons impacted can contact Revenue directly, either online via MyAccount or by phone at (01) 738 3636.