I move amendment No. 4:
In page 6, between lines 18 and 19, to insert the following:
“Exemption in respect of certain expense payments for resident relevant directors
3. The Principal Act is amended by inserting the following section after section 195C:
“Exemption in respect of certain expense payments for resident relevant directors
195D. (1) In this section—
‘civil servant’ has the meaning assigned to it by the Civil Service Regulation Act 1956;
‘company’ has the same meaning as it has in section 4;
‘director’ has the same meaning as it has in section 770;
‘relevant director’, in relation to a company, means a person holding office as a non-executive director of that company—
(a) who is resident in the State, and
(b) whose annualised amount of the emoluments from the office for the year of assessment 2017 and for each subsequent year in which the person is a relevant director of the company, other than payments to which this section applies, does not exceed €5,000;
‘relevant meeting’ means a meeting in the State attended by a relevant director in his or her capacity as a director for the purposes of the conduct of the affairs of the company;
‘travel’ means travel by car, motorcycle, taxi, bus, rail or aircraft.
(2) This section applies to payments made by a company to or on behalf of a relevant director of that company in respect of expenses of travel and subsistence incurred by the relevant director, on and from 1 January 2017, solely for the purpose of the attendance by him or her at a relevant meeting.
(3) So much of a payment to which this section applies, as does not exceed the upper of any relevant rate or rates laid down from time to time by the Minister for Public Expenditure and Reform in relation to the payment of expenses of travel and subsistence of a civil servant, shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.”.”.
Section 114 of the Taxes Consolidation Act 1997 provides for a tax deduction in respect of expenses of travel which are necessarily incurred in the performance of the duties of an office or employment. In the case of an executive director or employee, this means that expenses of travel incurred in travelling from his or her normal place of work to attend board meetings will generally qualify for a tax deduction and an employer may pay or reimburse such expenses free of tax. However, in the case of a director who has no executive or other duties within a company, this means that expenses incurred in travelling to attend board meetings in the State did not previously qualify for a tax deduction.
In the Finance Act 2015 I provided for an exemption from tax in respect of such expenses for non-resident, non-executive directors. However, the case has been made for this exemption to be extended to include resident non-executive directors. As I stated on Committee Stage, l undertook to examine the position for this cohort of individuals. I am now introducing an amendment to exempt payments made to resident non-executive directors in respect of expenses of travel and subsistence incurred in attending board meetings in the State. To take account of concerns aired by Deputies on Committee Stage about the proposal to exempt such payments where directors are in receipt of large fees, I am limiting the scope of the exemption to directors whose annualised income from the office does not exceed €5,000. It will also only apply to meetings held in the State and it will only apply to amounts up to the Civil Service approved rates for mileage and subsistence.
Deputy Michael McGrath moved an amendment on Committee Stage and while I have not taken it totally on board, I have incorporated its spirit in this amendment. Other Deputies raised issues around whether excessive tax breaks might be given. That is why I have provided for two caps. I think this meets the consensus on Committee Stage.
