I am informed by the Revenue Commissioners that the general rule in relation to expenses allowable under schedule E are contained in section 114, Taxes Consolidation Act, 1997, which states:
"Where the holder of an office or employment of profit is necessarily obliged to incur and defray out of the emoluments of the office or employment of profit expenses of travelling in the performance of the duties of that office or employment, or otherwise to expend money wholly, exclusively and necessarily in the performance of those duties, there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed."
The commentary from the Notes for Guidance of Inspectors reads:
"The general rule as to the deductibility of expenses in computing the amount chargeable under Schedule E is that the expense must be wholly, exclusively and necessarily incurred by the holder of an office or employment in the performance of the duties of the office or employment."
I am also advised by the Revenue Commissioners that they have issued leaflets on the tax treatment of payments by employers to employees covering reimbursement of motoring and subsistence expenses. These leaflets – IT51 for employees motoring expenses and IT54 for employees subsistence expenses – are available from the Revenue forms and leaflets service – telephone 01-8780100 – and are also available on the Revenue website, www.revenue.ie. I have arranged for copies to be forwarded to the Deputy. These leaflets set out the circumstances in which an employer may make expenses payments to employees without the requirement to deduct tax. Where an employer does not make expenses payments in accordance with the schemes outlined in the leaflets, tax is deductible on the payments in the normal way and the individual may claim a deduction for expenses from his or her inspector of taxes.
