Tuesday, 1 April 2014

Questions (167)

Pearse Doherty


167. Deputy Pearse Doherty asked the Minister for Finance if he will provide a list of the tax benefits and-or concessions that do not require primary legislation to alter their eligibility rules or payment levels. [14948/14]

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Written answers (Question to Finance)

The various Taxes Acts provide for the granting of credits, reliefs, allowances and deductions for tax purposes. A standard approach used is to provide for a relief in primary law and set out the terms and conditions in secondary legislation. It should be noted that the question is very wide reaching and the research needed to ensure that all of the tax benefits referred to in the question were identified could not be conducted in the time available. There may, therefore, be examples of tax benefits or concessions in addition to those identified. I am taking it that the Deputy is referring to tax benefits that impact on the level of tax liabilities or reliefs that may be availed by taxpayers. If the Deputy has a specific tax benefit or issue in mind, he may wish to contact the Revenue Commissioners directly.  

In general terms, such credits, reliefs, allowances and deductions are granted on the basis of a claimant meeting the qualifying criteria set out in primary legislation. Any alteration of the qualifying criteria for these credits, reliefs, allowances and deductions can only be brought about by amending primary legislation. In addition, allowances, reliefs and deductions are generally based on the amount paid or incurred by an individual or a percentage of the amount paid or incurred. Any alteration to this can only be brought about by amending primary legislation.  

Income tax

Section 195 of the Taxes Consolidation Act (TCA) 1997 provides for exemption of certain earnings of writers, composers, and artists. Ministerial Guidelines on the relief are issued by the Minister for the Arts, Heritage and the Gaeltacht.  

Relief for fees paid for third level education: 

The definition of "qualifying fees" under section 473A TCA 1997, allows the Minister for Education and Science, with the consent of the Minister for Finance to set the maximum amount of fees allowable in respect of an approved course for an academic year.  This is currently set at €7,000.  

Indirect Taxes

The reliefs and exemptions in relation to Vehicle Registration Tax (VRT) are provided for in the 1992 Finance Act and in a number Ministerial Regulations. A series of Regulations were made coinciding with and following the introduction of VRT in 1993.  These regulations provide more detailed conditions under which reliefs and exemptions may be granted, for example where repayments of VRT may be made (SI No. 437 of 1992), where tax may be remitted or repaid to disabled drivers, passengers or organisations (SI No. 353 of 1994), where relief may be granted for transferring domicile to the State (SI No. 59 of 1993), where tax may be exempted for temporary importation (SI No. 60 of 1993).  

In  relation to VAT primary legislation provides that reliefs may be granted by way of Ministerial Order. There are a small number of VAT Refund Orders in place that are generally historic and have been made for societal or economic purposes. Examples of such reliefs in relation to VAT are as follows:

Value-Added Tax (Refund of Tax)(No. 15) Order 1981 (S.I. No 428 of 1981) which provides for refund of VAT in relation to goods purchased for the exclusive use of disabled persons.  

Value-Added Tax (Refund of Tax)(No. 23) Order 1992 (S.I. No 58 of 1992) which provides for refunds of VAT in relation to qualifying medical equipment purchased through voluntary donations.  Value-Added Tax (Refund of Tax)(Flat-rate Farmers) Order  2012 (S.I. No 201 of 2012) which provides for refunds of VAT paid by farmers in respect of construction of farm buildings, fencing, drainage and micro-generation equipment.  

Exercise of discretion by Revenue - Pensions

Part 30 of the TCA 1997 grants discretionary powers to Revenue in relation to the approval of occupational pension schemes, retirement annuity contracts and PRSAs. The Revenue Pensions Manual, published on the Revenue website, gives general guidance on how these powers are exercised and describes certain administrative provisions arising on foot of the exercising of Revenue's discretion in the pensions area. Amongst these provisions, and of particular relevance in the context of the question, is that relating to the payment of once-off pensions (i.e. full commutation) in respect of trivial or small pensions funds.  

Under this measure, an approved pension scheme may permit full commutation of a pension if the aggregate benefits payable to an employee under the scheme and any other scheme relating to the same employment, do not exceed the value of a pension of €330 per annum. This treatment may also be offered in the same circumstances to holders of PRSAs and RACs. The commuted pension is subject to tax at a rate of 10% as provided for under section 781(3) TCA 1997. Alternatively, a once-off pension payment may be made where the total of all funds available for pension benefits from all sources, following payment of any lump sum benefit, is less than €20,000. In these circumstances, the rates of tax and USC to be applied are those that apply to any other pension payment.  

Revenue practices intended to facilitate compliance

On the basis of the qualifying criteria set out in primary legislation, for administrative reasons and to obviate the necessity for taxpayers to submit annual claims and to maintain records, the Revenue Commissioners sometimes set or agree fixed amounts for some, or some elements of reliefs, allowances and deductions. Examples include:

- Flat rate expenses. Where a large number of employees incur expenses which are deductible under the provisions of section 114 TCA 1997 and which are not reimbursed by their employer, a standard flat rate expenses deduction may be agreed between Revenue and representatives of groups or classes of employees (usually the employees are represented by trade unions). The agreed deduction is then available to all employees of the class or group in question. This ensures that each individual is granted the same amount and ensures uniformity of approach in Revenue offices around the country. In addition, it eliminates the necessity for individual claims to be submitted annually to Revenue.  However, this is not to say that an individual cannot make a claim over and above the agreed amount in respect of the actual amount deductible where this amount exceeds the flat rate.

- Travel & Subsistence rates. Reasonable vouched travel and subsistence expenses can be reimbursed to an employee on a tax free basis.  Rather than submit vouched expenses to employers, an employee may make a claim for round sum amounts once those amounts are not in excess of the civil service travel and subsistence rates, as set by the Department of Public Expenditure and Reform.

- Health expenses for children with life threatening illnesses or permanent disabilities. Tax relief under section 469 TCA 1997 is available for health expenses incurred in respect of children with life threatening illnesses (including child oncology patients), and children with permanent disabilities who require constant or regular hospital care.  Where the child is being treated at home, a flat rate of €305 (for 2013), to include the cost of telephone rental and calls, may be claimed where the expenses are incurred for purposes directly connected with the treatment of the child.

- Tax relief for Guide Dogs for blind people. Where a blind person maintains a trained guide dog supplied by the Irish Guide Dog Association, a sum of €825 may be claimed as a health expense under Section 469 TCA 1997.  Relief is available at the standard rate of tax.  Claimants are not requested to vouch such claims. However, a letter from the Irish Guide Dog Association confirming that the claimant is the registered owner of a guide dog must be submitted with the first claim for relief.

- Kidney Patients. Relief for health expenses is granted in respect of certain additional expenses incurred by kidney patients as follows:

- In cases of hospital dialysis (where the patient attends hospital for treatment) the expenses incurred in travelling to and from hospital for treatment are allowed at the rate of €0.17 per km.

- In cases of home dialysis (where the patient uses a dialysis machine at home) relief is allowed up to the following limits for 2013:

- Electricity used of €2,006

- Laundry and Protective Clothing of €1,935

- Telephone €305

- The cost of expenses incurred in travelling to and from hospital for treatment is allowed at the rate of €0.17 per km.

- In cases of Chronic Ambulatory Peritoneal Dialysis - "CAPD" (where the patient has treatment at home without he use of a dialysis machine) relief is allowed in respect of expenditure up to the following limits for 2013:

- Electricity used of €1,585

- Telephone €305

- The cost of expenses incurred in travelling to and from hospital for treatment is allowed at the rate of €0.17 per km.

- Small benefits exemption. Where an employer provides an employee with a small benefit (that is, a benefit with a value not exceeding €250), PAYE and PRSI need not be applied to that benefit.  No more than one such benefit given to an employee in a tax year qualifies for such treatment.  Where a benefit exceeds €250 in value, the full value of the benefit is subjected to PAYE and PRSI.

The idea of this administrative small benefits exemption, introduced by the Minister for Finance, was to exclude from tax items such as Christmas gifts given by an employer to employees.  This treatment does not apply to cash payments, which are taxable in full.  

Other Revenue interpretations and practices

The Revenue Commissioners will, on occasion, issue interpretations and guidance in relation to the application of certain reliefs, benefits or deductions, particularly where there is an element of uncertainty as to the application of the law in particular circumstances. These interpretations may be published on the Revenue Commissioners' website in Tax & Duty Manuals[1] or as precedents[2] or in Tax Briefings[3] or e-briefs[4].  These interpretations do not alter the eligibility rules or payment levels; they are simply clarifications.  

[1] http://www.revenue.ie/en/about/foi/s16/index.html

[2] http://www.revenue.ie/en/about/foi/precedents/index.html

[3] http://www.revenue.ie/en/practitioner/tax-briefing/index.html

[4] http://www.revenue.ie/en/practitioner/ebrief/index.html