Is the winnings from an employment settlement taxable?

June1992

Hi, with the ROS deadline this Thursday night I was wondering if the winnings from an employment settlement is taxable?

I had no Sole Trader income last year and I was hoping this settlement was tax free.

I remember reading somewhere that the first 10k of a settlement in Ireland is tax free. Is this correct?

Thanks

gerrybbadd

June1992 wrote: »

Hi, with the ROS deadline this Thursday night I was wondering if the winnings from an employment settlement is taxable?

I had no Sole Trader income last year and I was hoping this settlement was tax free.

I remember reading somewhere that the first 10k of a settlement in Ireland is tax free. Is this correct?

Thanks

It's complicated, and depends on what the settlement actually is.

If it is for unfair or constructive dismissal, any payment received, unless otherwise specified, is considered to be for loss of earnings, and is taxable in full, in the usual manner.

I'm not sure about any 10K exemption, i've never heard this before

exaisle

You're possibly confusing it with the exemption on lump sums paid in redundancy cases

June1992

I cant link to the site as I dont have enough posts but Revenue's site seems to cover this area. Under "Out Of Court Settlements" it says:

"Claims concerning the infringement of employees’ rights and entitlements and claims concerning employers’ obligations to employees may sometimes be settled by agreement without referral to a relevant authority. A payment made under such an agreement will also qualify for the exemption where all of the following conditions are met -


the agreement in settlement of a claim is evidenced in writing; the agreement is not between ‘connected persons’ (for example, employer and relative, employer and director);

the claim would have been a bona fide claim under a relevant Act had it been made to a relevant authority ( for example, sufficient grounds for the claim; claim is within the scope of one of the relevant acts; claim made within specified time limits, etc.);

the claim is likely to have been the subject of a recommendation, decision or determination by a relevant authority that a payment be made to the person making the claim; and

the payment does not exceed the maximum amount which could have been awarded under relevant legislation by the Rights Commissioner,the Director of the Equality Tribunal, Employment Appeals Tribunal or Labour Court as appropriate (for example, the maximum amount of compensation arising from a claim made under the Employment Equality Act, 1998 for acts of discrimination cannot exceed a sum calculated as being not greater than 104 weeks pay)"

exaisle

I think this is the link:

https://www.google.ie/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0ahUKEwjO_dP6wZ7QAhVoL8AKHQKRD88QFggjMAE&url=http%3A%2F%2Fwww.revenue.ie%2Fen%2Fabout%2Ffoi%2Fs16%2Fincome-tax-capital-gains-tax-corporation-tax%2Fpart-07%2F07-01-27.pdf&usg=AFQjCNHvImetDS0hmZGGglwNsSUQJCS5VA&sig2=x3BsSTlY8h42Wm4Jjvbdjw&cad=rja

As you'll see from reading that, the exemption does not apply to amounts awarded in lieu of wages.

exaisle

I think this is the link:

https://www.google.ie/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0ahUKEwjO_dP6wZ7QAhVoL8AKHQKRD88QFggjMAE&url=http%3A%2F%2Fwww.revenue.ie%2Fen%2Fabout%2Ffoi%2Fs16%2Fincome-tax-capital-gains-tax-corporation-tax%2Fpart-07%2F07-01-27.pdf&usg=AFQjCNHvImetDS0hmZGGglwNsSUQJCS5VA&sig2=x3BsSTlY8h42Wm4Jjvbdjw&cad=rja

As you'll see from reading that, the exemption does not apply to amounts awarded in lieu of wages.

June1992

Ive already filed on ROS under the direction of what I posted above and the direction of my accountant.

exaisle

Makes me wonder why you asked advice here when you had an accountant?

:-)

exaisle

Makes me wonder why you asked advice here when you had an accountant?

:-)

June1992

He has over 100 clients, so while he was in his busiest week of the year i decided to do some research myself first

Thanks