Friday, September 16, 2022

Gordon Deegan

A ‘high-flier’ on a basic salary of just under €250,000 per annum has had his ‘wings clipped’ after losing out in a tax dispute with the Revenue Commissioners.

The tax dispute centred over a €45,833 compensation payment the worker received from his employer when he lost the use of a company car.

The worker had use of the company car between 1998 and 2017 and after a change in the company ownership, the worker received a once off payment of €45,833 for the loss of the company car and the amount was treated as taxable by his employer.

However, the worker in his tax return treated the once-off payment of €45,833 as tax-free and showed that he had overpaid tax of €22,675 for 2017.

The worker’s agent told Revenue that the entire amount of the once-off payment was tax-free and requested a refund of PRSI charged against the once off payment

The amount of tax at issue is €25,170 and the worker appealed that Revenue assessment to the Tax Appeals Commission.

However, the TAC has now found in favour of the Revenue and the assessment stands.

The man had a basic salary of €247,580 and the once off compensation for the loss of the company car brought his pay to the year to €293,413.

Revenue calculated that the worker’s overall personal income tax bill for the year was €101,391.

Revenue submitted that because the once-off payment was made in respect of the loss of a company car, this represents emoluments arising from the worker employment and is therefore chargeable under tax legislation.

In its determination, Chairperson of the TAC Marie-Claire Maney Chairperson dismissed the man’s appeal.

Ms Maney stated that the once-off payment received by the worker in 2017 was made in respect of the loss of the use of a company car.

Ms Maney stated that the worker’s Tax Agent confirmed to Revenue Commissioners that the worker’s employment was not terminated in 2017 and no submissions have been made to the Commission to the effect that the worker retired or was removed from his office or employment in 2017.

As a result the Commission found that the payment was not in respect of a termination payment or redundancy payment but was in substitution, or recompense, for the deprivation of the benefit which the Appellant had previously enjoyed.

Ms Maney stated: “Hence, it is taxable.”

Mr Maney stated that it is understandable that the appellant will be disappointed with the outcome of his appeal.

She said: “The Appellant was correct to check to see whether his legal rights were correctly applied.”

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