Revenue Tax Briefing

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Revenue Tax Briefing Issue 36, June 1999

Lump Sum Payments on Redundancy/Retirement Queries

The following are some queries we have received in relation to years of service and lump sum payments.

Q1.

What service is taken into account if a Career Break has been taken?

The service pre and post a career break may be added together for the purposes of determining ‘each complete year of the service’. The periods where the individual was on the career break would not be reckonable service.

For SCSB purposes where the employee has less than 3 years paid service in the immediate period prior to the date of leaving, the emoluments of the last 36 months of paid service would be taken into account in arriving at ‘the average for one year of the holder’s emoluments of the office or employment for the last 3 years of his/her service’.

Q2.

What service is taken into account for Job-sharers?

For job-sharers the length of service should be taken as the number of complete years with no apportionment to take account of the part time nature of the employment.

Q3.

What happens if an employee moves within group companies in Ireland?

Where the terms of the severance specifies that the payment to an employee is in respect of employment in group companies and the employee worked for such companies within the State then those years of service can be taken into account in calculating ‘the years of service of the holder in the office or employment’.

Unusual features of Employment Service

If a taxpayer’s employment service includes any unusual features and he/she is unclear about what service should be taken into account the matter should be referred to the local tax office.

FINANCE ACT 1999 CHANGES

The basic exemption in Section 123 TCA 1997 has been increased for payments made on or after 1 December 1998. The exemption is now ₤8,000 plus ₤600 for each complete year of service.