Revenue have issued a tax briefing confirming paternity benefit is a taxable payment.
This is in line with other social benefit type payments such as maternity benefit (taxable since July 2013), illness benefit and jobseekers benefit.
Paternity Benefit can be paid to either employed or self-employed people who are on paternity leave from work, and covered by sufficient social insurance (PRSI).
It is paid for two weeks, and is available for any child born or adopted on or after September 1, 2016.
Paternity leave can be taken at any time within the first six months following the birth or adoption.
Paternity benefit is claimed via form PB1 (submitted to Buncrana, Co Donegal), with notice also to be given to the employer.
An application should be made to the Department of Social Protection within four weeks of the proposed start date of the payment.
The individual must have sufficient PRSI paid in order to qualify for the benefit.
Slightly different rules apply for employees and the self-employed (see accompanying table).
Generally, where a self-employed person aged between 16 and 65 has a liability to PRSI for the year (self-employed income greater than €5,000), then the person is deemed to have made 52 weeks of self- employed contributions for that year under PRSI class S.
The minimum amount of PRSI payable for person s whose income is greater than €5,000 per annum is generally €500 per annum per person, with a slightly reduced rate of €300 in some instances.
From an employer’s perspective, paternity leave is a statutory entitlement, and strict legal rights are afforded to persons temporarily absent from work as a result of paternity leave.
For instance, an employer does not have the right to terminate an employee’s contract for the duration of their paternity leave.
Once the employee has given sufficient notice (at lest four weeks), then the employer is obliged to facilitate the leave period to the employee.
From an employer’s perspective, there is no obligation under the legislation to offer the employee any top-up to their wages.
However, individual legal contracts between employees and employers should be reviewed, to ensure the matter is dealt with without confusion.
An employer is entitled to cancel an employee’s paternity leave where the employer has reasonable grounds for believing that an employee who is on paternity leave is not using the leave for the purposes of providing, or assisting in the provision of, care to the relevant child.
Paternity benefit is payable at a rate of €230 per week for two weeks, and as mentioned at the outset, this payment is taxable.
However persons in receipt of social welfare payments, including paternity benefit, are generally entitled to a proportional PAYE tax credit worth up to €1,650 per year.
This is particularly useful to the self-employed, who may not otherwise have had the benefit of any PAYE credit.
The PAYE credit, if not already claimed elsewhere, could shelter up to €92 of the income tax exposure on the payment.
For farmers and other self-employed persons, it’s well worthwhile checking out what benefits are available.
Where an application is submitted late, the Department of Social Protection can refuse to make the payment, this is particularly so if the application is more than six months late.
As always, for the best advice on these matters, each individual’s circumstances should be examined.
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