Dáil Éireann Debate, Tuesday - 15 January 2019
190. Deputy Michael McGrath asked the Minister for Finance his plans for changes to section 114 of the Taxes Consolidation Act 1997 in view of the decision made by the Tax Appeals Commission on 24 September 2018; and if he will make a statement on the matter. [54392/18]
View answerOn 11 December last, I replied to question number 51690-18 from Deputy Pearse Doherty in connection with this matter. In accordance with section 114 of the Taxes Consolidation Act 1997, where an employee is necessarily obliged to incur and defray out of the emoluments of the employment expenses of travelling in the performance of the duties of the employment, or otherwise to expend money wholly, exclusively and necessarily in the performance of those duties, there may be deducted from the emoluments of the employee to be assessed to income tax the expenses so necessarily incurred and defrayed.
I am advised by Revenue that arising from an employee’s entitlement to a tax deduction under that provision in respect of certain expenses, there exists a long-standing Revenue practice under which employers may reimburse tax-free to employees the expenses of travel (and subsistence relating to that travel), subject to certain conditions being fulfilled. The conditions under which the reimbursement to employees of the expenses of travel and subsistence may generally be made without deduction of tax are as follows:
(a) firstly, the employee must be temporarily away from his/her normal place of work in the performance of the duties of his/her employment;
(b) secondly, the travel expenses must be necessarily incurred in the performance of the duties of the office or employment, and
(c) thirdly, arising from a long-accepted position, supported by tax case law, the expenses of subsistence must attach to travelling necessarily incurred in the performance of the duties of the office or employment.
Moreover, provided the employee bears the cost of all expenses of travel necessarily incurred in the performance of the duties of his/her employment (and bears the cost of subsistence relating to such travel), Revenue will disregard for income tax purposes the reimbursement of expenses of travel and subsistence, where such reimbursement is made by way of:
(a) a flat rate up to, but not exceeding, the prevailing Civil Service rates for travel and subsistence, or
(b) a flat rate based on any other schedule of rates and related conditions of travel and subsistence, which do no more than reimburse the employee for actual expenditure necessarily incurred.
Revenue and my Department have noted the comments of the Appeal Commissioner in the case concerned (Tax Appeals Commission Determination 20TACD2018 refers). Revenue has published extensive guidance on the Tax Treatment of the Reimbursement of Expenses of Travel and Subsistence to Office Holders and Employees – Part 05-01-06 of the Tax and Duty Manual refers – and, notwithstanding the Appeal Commissioner’s comments, has no plans to alter its practice or published guidance on this matter.
In all the circumstances, I do not see that there is a need to consider a legislative amendment to section 114 of the Taxes Consolidation Act 1997.
