Dáil Éireann Debate, Thursday - 14 November 2013
42. Deputy Finian McGrath asked the Minister for Finance if his attention has been drawn to the fact that Allied Irish Banks has changed the way its staff can purchase annual travel tickets and that the staff are now required to pay an external private company a commission on top of the face value of the tickets; if this commission attracts tax and PRSI relief; his views on this change; and if he will make a statement on the matter. [48708/13]
View answerI have been informed by AIB that the bank does not publicly disclose the details of contracts with individual external service providers. AIB utilises the expertise of a number of different third party firms on a case by case basis, subject to an evaluation of the bank's requirements, costs and the relevant external parties. AIB is focused on a significant cost reduction programme and, as part of this process, has policies and procedures in place in respect of the appointment of external third parties. I understand that as part of the cost cutting process, the staff are being charged commission to cover the cost of the administration of the annual travel pass scheme. All external service provider contracts entered into by AIB comply with AIB's policy in relation to engaging external service providers.
I have also been informed by the Revenue Commissioners that a benefit in kind charge under the provisions of Section 118 TCA 1997 arises where an employer incurs expense in the provision of living or other accommodation, entertainment, domestic or other services, or other benefits or facilities of whatever nature. The charge is based on the amount of the expense that is not made good to the employer by the employee.
However, section 118(5A) of the Taxes Consolidation Act 1997 provides that a benefit-in-kind charge shall not apply to the expense incurred by a body corporate in or in connection with the provision for a director or employee of an annual bus, railway or ferry travel pass issued by or on behalf of one or more approved transport providers. Accordingly, the director or employee receives the benefit of the travel pass free of income tax, PRSI and USC.
If the employer incurred any incidental expenses such as commission in the provision of a travel pass, these expenses would also be covered by the BIK exemption.
Where an employer facilitates a salary sacrifice scheme whereby the employer incurs the expense initially in providing the travel pass and the employee forgoes the right to receive part of his or her remuneration to make good that expense to the employer, the amount of the remuneration forgone is exempt from income tax, PRSI and USC in accordance with section 118B(2)(a).
