Bank staff could face tax bills on their mortgages

Bank staff could face tax bills on their mortgages

Bank staff who got preferential mortgage interest rates, and subsequently had part of the debt written off, could find themselves facing a tax bill from the Revenue Commissioners.

Many members of staff at financial institutions enjoy preferential rates with their employers in relation to home loans, which incur tax.

If these mortgages should fall into arrears however – and some of the debt is written off – these individuals must pay tax in relation to the amount being written off.

A spokeswoman for the Revenue said the legislative position in this regard “is clear”, and that if a bank worker gets a portion of their loans written down, there would be a tax liability.

She added that if a bank worker gets the same arrangement on their mortgage restructuring as an ordinary customer no tax applies.

“The legislative position is clear – where an employee receives a benefit from their employer, it is subject to income tax,” she said.

“This includes preferential interest rates and loan write downs.

“However, if it can be shown that the outcome of a write-down would be the same for an employee of a bank as it would be for the customers [third parties] of a bank, Revenue will look at the write-downs on a case by case basis to determine if they are subject to income tax,” she added.

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