Taxation of Maternity Benefit

maternity beneefitTaxation of Maternity Benefit, Adoptive Benefit and Health & Safety Benefit with effect from 1st July 2013.

The Revenue Commissioners have confirmed that Maternity Benefit, Adoptive Benefit and Health & Safety Benefit will be taxed by Revenue by reducing an employee’s tax credits and standard rate cut off point with effect from 1st July 2013. This means that employers will not be responsible for the taxation of these benefits through payroll as previously anticipated.

It was announced in the December 2012 Budget that “with effect from 1st July 2013, Maternity Benefit, Adoptive Benefit and Health & Safety Benefit, including any child dependant additions, will become taxable in full. USC and PRSI will not apply”.

Tax will not be deducted ‘at source’ by the Department of Social Protection on these payments. Instead, as part of the on- going exchange of information arrangements between the Department of Social Protection and Revenue, Revenue will receive the payment details which will be updated onto Revenue’s records.

Individuals who pay their tax through the PAYE system will have their annual tax credits and cut-off point reduced by the amount of these payments.  Employers will be advised of the adjusted tax credits and cut-off points on employer tax credit certificates (P2Cs).

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