At a TALC meeting last month, we asked Revenue for clarification of the tax position following a ruling by the High Court (O’Neill -v- The Revenue Commissioners) which determined that a qualified adult for the purposes of the old age contributory pension is beneficially entitled to the amount of the increase of the pension payment. Revenue clarified an additional employee tax credit or increased standard rate band is not due in these cases in accordance with section 126 (2B) TCA 1997.

Since 24 September 2007, Social Welfare Legislation directs that payment of this increased amount be paid directly to the qualified (or dependent) adult. However in dealing with how this income is assessed for tax purposes, Section 126 (2B) TCA 1997 was amended with effect from 1 January 2014 to provide that notwithstanding the direct payment of the increase to the qualified adult, the pension together with any increase is treated as the income of the beneficiary of the pension i.e. the pensioner who qualifies for the pension in the first instance rather than as income of the qualified adult. Therefore an additional employee credit or increased standard rate band is not available for the purposes of calculating tax due on payment of the qualified adult payment.

The period of time in question in the case before the High Court pre-dates this change in legislation. Therefore the statutory position from 1 January 2014 does not represent a contradiction with the High Court ruling.