Confusion over ex gratis redundancy payments

CramCycle

My Sister has just been made redundant but there is confusion over taxes. I thought she got her statutory redundancy tax free, with another exemption with an IT21 form. Her boss found this (all very amicable redundancy) and said he will get it sorted for her if she signs of a declaration she has not received redundancy before going over 200,000 in total.

"Section 201(8) Taxes Consolidation Act 1997 provides a lifetime tax exempt ceiling of €200,000 on ex-
gratia termination payments arising on or after 1 January 2011."

Is she right in that all ex gratis payments (bar her owed holiday pay) will be tax free? I have no idea but that's what it seems like.

Immy

No there is a formula that will be used to calculate the tax free portion.

CramCycle

Immy wrote: »

No there is a formula that will be used to calculate the tax free portion.

Is there anywhere online that tells you what the formula is? I just can't seem to find one anywhere but to be honest, I am not sure what exactly goes into a keyword search for it.

Thanks

Immy

http://www.revenue.ie/en/tax/it/leaflets/it21.html

it's the calculation for the basic exemption or the Standard capital superannuation benefit. Which give the higher result is the one you take.

CramCycle

Much appreciated

Mr. Incognito

One of the conditions to get the tax free sum is you have not received another one in the previous ten years.

They are probably seeking a declaration to this effect. Pretty standard

CramCycle

Mr. Incognito wrote: »

One of the conditions to get the tax free sum is you have not received another one in the previous ten years.

They are probably seeking a declaration to this effect. Pretty standard

That's exactly what it was, never mentioned 10 years, just a signed letter stating she had never received a redundancy payment ever, which she hasn't so it made no difference about the 10 years in her case.

mozattack

Mr. Incognito wrote: »

One of the conditions to get the tax free sum is you have not received another one in the previous ten years.

They are probably seeking a declaration to this effect. Pretty standard

Sorry but are you sure about this and are you not getting mixed up with the conditions for claiming the increased exemption.

I can claimed IE in 2005, move to another job and claim Basic Exemption and/or SCSB at any stage (obviously maths decide whether the SCSB is of use to me)

mozattack

CramCycle wrote: »

That's exactly what it was, never mentioned 10 years, just a signed letter stating she had never received a redundancy payment ever, which she hasn't so it made no difference about the 10 years in her case.

I have seen these forms and in fact have tweaked them - it is a simplification form so that the employer sees "yes - no prior redundancies" and then can move on. If the employee clicks "no, received a redundancy payment" this should lead to futher questions:

- was it in the last 10 years; if so was increased exemption claimed
- what was the ex-gratia amount; this is relevant for the €200k life time limited

etc etc