4. TAXATION OF CERTAIN SOCIAL WELFARE BENEFITS
From 1st July 2013 certain Social Welfare Benefits not previously chargeable to Income Tax will come into the Income Tax net including:
1. Maternity Benefit
2. Adoptive Benefit
3. Health & Safety Benefit
Revenue will now be permitted to amend tax credit certificates and standard rate cut off points to collect the tax arising on these benefits.
These benefits are not liable to the Universal Social Charge.
What happens if the salary is paid by the Employer during Maternity Leave?
Previously the employer paid the full salary to the employee less an amount representing the maternity benefit. The net salary was liable to Income Tax, Universal Social Charge and PRSI while the employee received the Maternity Benefit tax free.
The employer received a tax saving on employer’s PRSI for the amount of the Maternity Benefit received by the employee.
From 1st July 2013 onwards the employee will pay up to 41% Income Tax on the amount of the Maternity Benefit.