Michael Noonan
Question:64 Mr. Noonan (Limerick East) asked the Minister for Enterprise and Employment whether he has any proposals to extend schemes of profit sharing; and if he will make a statement on the matter.
Written Answers. - Profit Sharing Schemes.
The 1992 Finance Act (Part I Chapter IX) enables a body to establish a "profit sharing scheme" under which shares in the company, or in a connected company may, (subject to certain conditions) be appropriated tax free to eligible employees or directors.
The 1992 Finance Act clawed back some of the tax relief available under this scheme by limiting the amount of relief applicable for any individual participant in any tax year to shares not exceeding £2,000 in value. Prior to the 1992 Finance Act tax relief had been based on shares not exceeding £5,000 in value in any tax year.
While not a profit sharing scheme, the 1993 Finance Act amended Section 12 of the Finance Act 1986 which provides for an income tax deduction for an employee who buys new ordinary shares in his or her employing company. The relief which up to now has been subject to an overall lifetime limit of £750, is intended to provide a means of encouraging greater employee involvement in the business which employs him or her. The overall limit is being increased as respects shares issued in the year 1993-94 or subsequent years to £3,000.
Any legislative amendments to either extend existing profit sharing schemes, or to introduce new tax based profit sharing schemes would be enacted through the annual Finance Acts, and as such would be primarily the responsibility of the Minister for Finance.
While at the present time the Minister for Enterprise and Employment has no proposals to extend schemes of profit sharing, the matter will be kept under review in the future.