Dáil Éireann Debate, Thursday - 9 May 2024
156. Deputy Paul Kehoe asked the Minister for Finance whether he is giving any consideration to reducing the tax payable on maintenance payments received by divorced partners who have no additional income but are precluded from applying for State benefits due to their gross income from their maintenance payments; and if he will make a statement on the matter. [21031/24]
Amharc ar fhreagraThe tax treatment of maintenance payments varies depending on:
Whether the maintenance arrangement in place is legally enforceable or voluntary,
Whether the maintenance payment is made for the benefit of the other party to the relationship or a child, and
The basis of assessment applicable to the couple.
Where the payment is legally enforceable and is made for the benefit of the other party to the relationship, the recipient is subject to Income Tax, USC and PRSI on the amount received. Where a legally enforceable payment is made for the benefit of a child the recipient will not be subject to income tax, USC or PRSI on the amount received.
A maintenance payment will be legally enforceable if it is made pursuant to an order or rule of court, deed of separation, trust, covenant, agreement, arrangement or any other act giving rise to a legally enforceable obligation arising on foot of:
The dissolution or annulment of a marriage or civil partnership, or
The separation of the parties to a marriage or civil partnership where such separation is expected to be permanent and there is no possibility of reconciliation between the parties.
Where the payment does not meet the above criteria it will be treated as a voluntary maintenance payment.Voluntary maintenance payments are disregarded for income tax purposes. This means that the recipient will not be subject to income tax, USC or PRSI on the amount received.
The tax treatment relating to legally enforceable or voluntary payments, applies where the parties are assessed to tax as single persons at the time the payments are made.
I have no current plans to amend the position outlined above.
Further information is available at www.revenue.ie/en/additional-incomes/maintenance-payments/index.aspx
