Finance Act, 1993

Tax treatment of certain severance payments.

7.—(1) Section 115 of the Income Tax Act, 1967 , is hereby amended by the insertion of the following subsection after subsection (1):

“(1A) (a) Paragraph (d) of subsection (1) shall not apply to the following payments, that is to say—

(i) a termination allowance payable in accordance with the provisions of section 5 of the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992 , and any regulations made thereunder,

(ii) a severance allowance or a special allowance payable in accordance with the provisions of Part V (inserted by the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992 ) of the Ministerial and Parliamentary Offices Act, 1938 , or

(iii) a special severance gratuity payable under section 7 of the Superannuation and Pensions Act, 1963 , or any analogous payment payable under or by virtue of any other enactment.

(b) (i) Subparagraphs (i) and (ii) of paragraph (a) shall apply and have effect in relation to payments made on or after the 1st day of November, 1992.

(ii) Subparagraph (iii) of paragraph (a) shall apply and have effect in relation to payments made on or after the 6th day of May, 1993.”.

(2) (a) This subsection applies to the following payments, that is to say—

(i) a termination allowance (other than that part of the allowance which comprises a lump sum) payable in accordance with the provisions of section 5 of the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992 , and any regulations made thereunder, and

(ii) a severance allowance or a special allowance payable in accordance with the provisions of Part V (inserted by the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992 ) of the Ministerial and Parliamentary Offices Act, 1938 .

(b) Notwithstanding any other provision of the Income Tax Acts, payments to which this subsection applies, made on or after the 1st day of November, 1992, shall be deemed to be—

(i) profits or gains accruing from an office or employment and, accordingly—

(I) tax under Schedule E shall be charged thereon, and

(II) the tax so chargeable shall be computed under section 110 (1) (inserted by the Finance Act, 1991 ) of the Income Tax Act, 1967 ,

and

(ii) emoluments to which the provisions of Chapter IV of Part V of the Income Tax Act, 1967 , are applied by section 125 of that Act.