Postmasters warned exit deal payments will be subject to tax
Postmasters are being warned by an independent consultant that they will be liable to pay Capital Gains Tax if the terms of an exit package being offered by An Post to close 390 outlets nationwide are accepted.
Remaining post offices nationwide have been offered a new contract. Those not offered the renewed terms may be able to swap with a local postmaster who was offered a contract but is considering retirement. This is to ensure An Post's commitment that 95pc of the population be within 15km of a post office. Any such swap deals would be subject to An Post's approval.
The post office owners who opt to take up An Post's redundancy offers have been told that these payments would be subject to Capital Gains Tax.
Independent advice from consultants Grant Thornton warns the redundancy payments will be regarded as capital payments.
In a letter to the Irish Postmasters' Union (IPU), the consultants said: "The exit payments are not income from employment and therefore will not qualify for the termination payment exemptions which are associated with payments to employees on cessation of employment."
The Grant Thornton letter outlines scenarios where tax relief may apply to certain postmasters and recommends each individual post office seeks professional advice.
The IPU, a body representing 90pc of postmasters, has endorsed the new contracts offered by An Post. Its members recently supported a ballot to accept a new plan for the post office network.
Debbie Byrne, managing director of An Post Retail, said the plans will deliver an enhanced and renewed Post Office Network.
"Our core priority will be to ensure that communities that are served by any retiring postmasters will continue to have access to post office services locally.
"We have published a protocol on the provision of post office services for communities where a postmaster wishes to retire and we are establishing an independent review mechanism of An Post's decisions concerning future post office provision."
The IPU wants further assurances and called for a long-term commitment that social welfare payments will continue to be paid in An Post outlets.
The union said these were vital and accounted for 40pc of all post office activity, along with a further 60pc of spin-off transactions.
The current deal runs until the end of 2019.
The Department of Social Protection said it is legally obliged to tender for the provision of cash services from January 2020.
IPU general secretary Ned O'Hara said postmasters need certainty on this issue.
"We need a clear signal from An Post and government that they will maximise what Post Offices can offer to drive footfall and provide the best possible service to communities."
A spokesman for the Department of Social Protection said: "The Department remains committed to giving social welfare recipients choice of payment method and makes payments in line with customer preference."