John Bruton
Question:275 Mr. J. Bruton asked the Minister for Finance if he will consider re-evaluating the VRT tax rebate on cars for disabled drivers during his review for budget 2004; and if he will make a statement on the matter. [25493/03]
Written Answers. - Tax Code.
I assume that the Deputy is referring to the VRT relief available under the disabled drivers and disabled passengers, tax concessions, scheme. I will consider all aspects of taxation in framing measures for the 2004 budget. As the Deputy is aware, however, it is not customary for the Minister for Finance to indicate in advance what measures, if any, will be taken in the budget.
Paul Kehoe
Question:276 Mr. Kehoe asked the Minister for Finance his plans to alter the current system of taxation in relation to company cars; the way in which this will affect those in receipt of a company car; and if he will make a statement on the matter. [25558/03]
I presume the Deputy is referring to benefit-in-kind on employer provided cars and to certain changes which I have announced will come into effect on 1 January 2004, which were provided for in the Finance Act 2003. The current system of taxation in relation to company cars will be altered principally in two respects with effect from that date. First, employers will be obliged to deduct through the PAYE system the tax due on certain benefits-in-kind, including company cars. The amount of the tax due on the company car will be determined by reference to the cash equivalent of the private use of such car.
Previously, where a company car was available for private use, the income tax liability was collected either during the course of the tax year, by reducing the employee's tax credits and standard rate cut-off point by the taxable amount in respect of the company car thereby increasing the PAYE deducted to collect the liability arising, or where it was not possible to collect the tax due on the benefits by restriction of tax credits, by way of an end of year tax review. Second, employee PRSI including the health contribution levy and employer PRSI will also be due on the cash equivalent of the private use of the company car. Benefits-in-kind provided prior to 31 December 2003, including company cars, were not liable to PRSI.
In order to facilitate the introduction of the new system, the existing system of valuing the benefits of car usage was changed and simplified in the Finance Act 2003. The cash equivalent will be determined by applying a fixed percentage, based on the annual business mileage, to the original market value of the vehicle supplied, less any amount required to be made good and actually made good by the employee directly to the employer in respect of any part of the cost of providing or running the company car. The cash equivalent will be taken to be a "notional payment" and added to the actual cash remuneration. The PAYE due will be calculated by reference to the total sum. The effect of the changes to be introduced from 1 January 2004 in respect of those in receipt of a company car will be that they will pay the tax and PRSI due on such benefit by way of deduction from salary through the PAYE system. This will bring greater equity as regards taxation between remuneration packages that include certain benefits and those that do not.
The Revenue Commissioners have published an employers' guide to operating PAYE and PRSI for certain benefits to assist employers in calculating the cash equivalent or the notional payment in respect of the private use of a company car. Prior to finalising the guide, my Department and the Revenue Commissioners had consulted the social partners and representatives of tax practitioners. Providers of payroll systems have also been briefed by the Revenue Commissioners on the changes required and the Rev enue Commissioners are providing nationwide seminars for employers.