Taxation of Spouses Contributory Old Age Pension
The Tax Appeal Commission published a decision on 4th September 20171 that Section 14 of the Social Welfare and Pensions Act 2007, mandating the increased pension to be paid directly to the spouse had the effect of bestowing the beneficial entitlement of the pension to the spouse.
The facts (briefly) were that the appellant was entitled to a Contributory Old Age Pension along with an increase to that pension as he had a Qualified Adult (his wife). The increased pension was paid directly to his wife, a procedure formalised in the 2007 Act.
In 2013 Revenue refused to apply the standard rate of tax to the increased pension payment and also denied the entitlement to the Employee Tax Credit on the grounds that the pension did not arise to the Appellant’s spouse but that it applied to the husband.
Revenue sought to tax the benefit based on the husband’s allowances without reference to the wife’s allowance.
As a consequence of this decision, the standard rate band should be increased. This decision has the effect of reducing the tax payable on such pension payments2.
The matter has however been appealed to the High Court.
This article is a general recital of the decision on the subject and is not intended to be a complete statement of the Law. Specific legal advice must be sought on a case by case basis. For further information please contact Robert Browne.
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