MINISTER FOR Finance Brian Lenihan has rejected Opposition criticism of the income levy regulations for retired people.
Fine Gael deputy spokesman on finance Kieran O’Donnell accused the Minister of an “underhand” approach on the issue.
Mr O’Donnell criticised the Minister over a procedure whereby married pensioners, who should be exempt, would have to pay the levy and claim it back at the end of the year. But the Minister has defended the procedure on grounds of practicality.
Mr O’Donnell said: “Married pensioners with a combined occupational pension and other income of less than €40,000 are supposed to be exempt from the income levy. However, the Minister is playing a dirty trick on these over-65s by imposing the levy during the year where their individual income[s] are over €20,000, and expecting them to claim it back at the end of the year.”
A spokeswoman for the Minister said: “It would not be possible for either the Revenue Commissioners or an employer or pension provider to know during the course of the year whether or not all of the requirements necessary for the exemption to apply have been met.
“This would include knowing, for example, if the person or their spouse had turned 65 in the tax year; if they had other income sources and the aggregate income from these sources; if there had been a change in employment circumstances, or if there had been a change in marital status during the year.
“Revenue would not be in a position to establish many of these matters until after the end of a tax year and hence the need for the legislation to provide for the exemption to apply on the basis of a person making a repayment claim after the end of the tax year.”
The provision should not give rise to a significant administration cost, the spokeswoman said.
“The Revenue Commissioners have. . . advised employers and pension providers that they may apply the personal exemption of €20,000 during the course of the year for those persons aged 65 years and over, irrespective of marital status, where it is clear that the person’s income for the year from that employment or pension will not exceed €20,000.
“Where it emerges after the end of the year that this arrangement results in an underpayment of levy Revenue will pursue recovery of the levy underpaid,” the spokeswoman said.