Taxation of qualified adult Pension

M

Matthew

Guest
This year Revenue issued a notice reaffirming that if your state pension includes a payment for a qualified adult ie your spouse you are only entitled to a single PAYE credit.That i can accept and understand.
However they have gone a step further and included the spouse's pension as the income of the main pensioner.This results in the spouses pension being taxed at the marginal rate of 41% since he also has an occupational pension and he now exceeds the tax band for the lower rate.Can the revenue do this?Quoting Social Welfare book SW118 it says ''Since 24th Sept 2007,by law we must pay the increase for a qualified adult directly to the Spouse unless they specify that it can be paid to you''.This happened to a relative of mine even though he inputted the income under the spouse colume.I have researched the revenue site and cannot find anything authorises this.can anyone clarify please.
 
I have made this point with revenue on many occasions and the answer has always been the same. "The pension (including the QA portion) is payable, based on the PRSI payments of one spouse during their working life therefore it is taxable to that spouse only".
BTW this has always the case, nothing new here.
 
Thank you.
As i see it now he should now get in contact with the Pension Office in Sligo and check if his spouse would be entitled to a pension in her own right.The spouse pension portion was approx 8000 so after tax at 41% a net of 4720.So if her PRSI credits give her a pension greater than the 4720 they would be better off financially jointly.
Some anomaly.I could imagine many people caught in this trap.
 
You can request on line a copy of PRSI contributions paid from welfare.ie and work it out from that.
If she is entitled to a pension in her own right she will then be entitled to a PAYE tax credit.
I have posted here about this anomaly a couple of times
 
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