Written Answers Nos. 397-414
398. Deputy Cormac Devlin asked the Minister for Finance if he will consider amending the bike to work scheme as part of the Budget 2021 process to allow more cohorts access the scheme, including the self-employed and retired persons; and if he will make a statement on the matter. [32426/20]
View answer409. Deputy Neasa Hourigan asked the Minister for Finance his plans to roll out the bike to work scheme to those in receipt of the old age pension in view of the recent tightening of Covid-19 restrictions; and if he will make a statement on the matter. [32565/20]
View answerI propose to take Questions Nos. 398 and 409 together.
Section 118 (5G) of the Taxes Consolidation Act 1997 provides for the cycle to work scheme. The scheme provides an exemption from benefit-in-kind where an employer purchases a bicycle and associated safety equipment for an employee to use, in whole or in part, to travel to work. Safety equipment includes helmets, lights, bells, mirrors and locks but does not include child seats or trailers. The scheme requires that the employee must mainly use the bicycle and safety equipment for qualifying journeys. This means the whole or part of a journey between home and the normal place of work.
The Financial Provisions (Covid-19) (No. 2) Act 2020 made some changes to the scheme, increasing the exemption limit from €1,000 to €1,250 or, in the case of electric bikes, to €1,500 for employer expenditure on the provision of bicycles and associated safety equipment, and also enabling employees to avail of the scheme more frequently.
Benefit-in-kind is a charge to tax that applies where an employer provides an employee with a benefit such as a bicycle, car or accommodation. As stated above, an exemption from benefit-in-kind applies in relation to the cycle to work scheme, provided the required conditions are met. However, where an employment does not exist, for example, as may be the case with retired people and old age pensioners, such individuals cannot qualify for the scheme. Also, where an employer-employee relationship does not exist, for example, in the case of self-employed individuals, such individuals cannot qualify for the scheme.
Finally, as Minster for Finance I do not offer any grant schemes for personal transportation. The Sustainable Energy Authority of Ireland is responsible for electrical vehicle grants and comes under the aegis of my colleague the Minister for Communications, Climate Action and Environment.
399. Deputy Ged Nash asked the Minister for Finance if the Revenue Commissioners will clarify the formula that was used to calculate the average net weekly pay under the terms of the TWSS for a person paid fortnightly; if the Revenue Commissioners has evidence obtained during its TWSS compliance programme or otherwise that would suggest that the formula artificially inflated the ARNWP compared to an employee who was paid on a weekly or a monthly basis; and if he will make a statement on the matter. [32462/20]
View answer400. Deputy Ged Nash asked the Minister for Finance if the Revenue Commissioners attention was drawn to situations which have arisen for employees that were paid on a fortnightly basis under the TWSS in which the employee has been required to return moneys to their employer due to claims by some employers that the Revenue Commissioners formula as applied to workers paid every two weeks makes the employer pay a higher amount than the employee was entitled to under the terms of the scheme; if this is the case, if the Revenue Commissioners will indicate the number of employees impacted; and if he will make a statement on the matter. [32463/20]
View answerI propose to take Questions Nos. 399 and 400 together.
The Temporary Wage Subsidy Scheme (TWSS), which was provided for in section 28 of the Emergency Measures in the Public Interest (COVID-19) Act 2020, expired on 31 August 2020. Of necessity, the underlying legislation and the scheme itself were developed very quickly, having regard to the urgent Government objective of getting much needed assistance to employers and employees, where businesses had been seriously affected by the pandemic.
The amount of subsidy payable to eligible employees was based on their ‘average revenue net weekly pay’ (ARNWP) for January and February 2020, as returned by the employer to Revenue through the real-time PAYE system. The ARNWP calculation was based on the number of insurable weeks within the January/February period rather than the pay frequency used as this was a more accurate and consistent method across all types of employees.
I have been advised by Revenue that there was no evidence during the TWSS compliance programme or otherwise that would suggest that the formula artificially inflated the ARNWP compared to an employee who was paid on a weekly or a monthly basis. Furthermore, the questions of an individual’s entitlements and rights in an employment context, what wages an employer would be legally obliged to pay employees in respect of hours worked and an employer’s capacity to pay wages to employees in the light of the impact of the Covid-19 pandemic on the employer’s business were all matters that were outside the remit of the TWSS.
401. Deputy Ged Nash asked the Minister for Finance if the Revenue Commissioners will set out the number of employees for whom employers accessed support through the TWSS for the final payment run under the terms of the scheme that were paid weekly, every two weeks and monthly in tabular form; and if he will make a statement on the matter. [32464/20]
View answerI would like to advise the Deputy that Revenue has recently prepared a detailed statistical report on the Temporary Wage Subsidy Scheme (TWSS), following the filing of payslips for the period to end August. This report is published at www.revenue.ie/en/corporate/documents/research/statistical-overview-of-covid-19-twss.pdf.
Included on page 10 of this report is a breakdown of TWSS employees by pay frequency. Revenue has confirmed that the pay frequency breakdown as reflected in the report remained relatively unchanged throughout the operation of the scheme.
The information requested by the Deputy is also set out in the tables below:
|
Pay Frequency of TWSS Employees |
Percentage of TWSS Employees |
|
Weekly |
62% |
|
Fortnightly |
9% |
|
Monthly |
27% |
|
Other |
1% |
|
Month |
Number of TWSS Employees |
|
March |
70,400 |
|
April |
424,700 |
|
May |
464,300 |
|
June |
444,300 |
|
July |
445,700 |
|
August |
399,600 |
For August, the final month that the TWSS was in operation, using the information in the above tables, the estimated numbers of TWSS employees at each pay frequency are set out in the table below:
|
August |
Percentage of TWSS Employees |
Number of TWSS Employees |
|
Weekly |
62% |
247,752 |
|
Fortnightly |
9% |
35,964 |
|
Monthly |
27% |
107,892 |
|
Other |
1% |
3,996 |
|
Total |
99%* |
395,604* |
402. Deputy Joe O'Brien asked the Minister for Finance his plans to take measures to ensure that insurance companies offer reasonably priced insurance policies to persons whose homes have been deemed at risk of flooding or coastal erosion (details supplied). [32465/20]
View answerI am conscious of the difficulties that the absence, or the withdrawal, of flood insurance cover can cause to homeowners and businesses.
However, you should be aware that the provision of insurance is a commercial matter for insurance companies, which is based on a proper assessment of the risks they are willing to accept. Consequently, neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products. This position is reinforced by the EU framework for insurance (Solvency II Directive).
Having said that, it is important to note that current Government policy in relation to increasing flood insurance coverage is targeted on the development of a sustainable, planned and risk-based approach to managing flooding problems. To achieve this aim there is a focus on:
- Investing almost €1 billion on flood relief measures over the lifetime of the National Development Plan 2018-2027;
- the implementation of the Office of Public Works (OPW) flood relief management plans; and
- maintaining channels of communication between the OPW and the insurance industry, in order to reach a better understanding about the provision of flood cover in affected areas.
The above approach is complemented by a Memorandum of Understanding between the OPW and industry representatives Insurance Ireland. This provides for the exchange of data in relation to completed flood defence schemes which should in-turn provide a basis for the increased provision of flood cover in these areas by insurance firms. In this regard, the Insurance Ireland/OPW working group, which my Department attends, meets on a quarterly basis to support this information flow and improve the understanding of issues between both parties.
I acknowledge that while there has been an overall increase in the provision of flood insurance in affected areas between 2015 and 2019, many householders are still experiencing difficulties. This is particularly the case for households in areas with demountable flood defences.
My Department is reviewing the challenges of property insurance and flooding and indeed this is one of the action points for my Department under the Climate Action Plan. Over the last year it launched a public consultation on Climate Change and Insurance and subsequently met with interested parties. The key themes that arose from the consultation related to (i) the lack of data on flood insurance coverage and (ii) the challenges of obtaining flood cover in areas with demountable defences. My Department is now meeting with key stakeholders such as the OPW, Irish Public Bodies, the Central Bank of Ireland and the State Claims Agency to further review the issues raised and assess a feasible way forward. This review is in progress and my Department will continue to provide updates on this work stream to the Climate Action Delivery Board.
Finally, the Deputy should be assured that Minister of State Fleming and I will continue to be proactively engage on all aspects of insurance reform, including flood insurance matter.
403. Deputy Fergus O'Dowd asked the Minister for Finance if he will address a matter in relation to the temporary wage subsidy scheme (details supplied); and if he will make a statement on the matter. [32472/20]
View answerThe Temporary Wage Subsidy Scheme (TWSS) was legislated for in section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020. The scheme was predicated on the employer wanting to keep the employees on the payroll and to retain them until business picked up. The employer was expected to make best efforts to maintain the employee’s net income for the duration of the scheme. Legally, however, there was no requirement for a minimum amount that the employer had to pay as a normal wages payment to an employee to top up the wage subsidy. The reason there was no such requirement was that many businesses were forced to close completely and would have had no capacity to continue to pay employees’ wages. The purpose of the TWSS was to get much needed financial assistance to employees, while retaining the employer / employee relationship which facilitated the early recommencement of normal business when conditions permitted.
I have been advised by Revenue that the question of an individual’s entitlements in an employment context, and the question of what wages an employer may or may not be in a position to pay such an employee in light of the impact of the Covid-19 pandemic on the employer’s business, were matters that were outside the remit of the TWSS. Essentially, the scheme had no role in relation to the employer/employee relationship in so far as the terms, conditions and entitlements of the employment are concerned.
Payments made under the TWSS are income supports and share the characteristics of income. Other income earners in receipt of comparable “normal wages” are taxable on those wages. In the interest of equity, therefore, payments under the TWSS are subject to income tax and USC.
While income tax and the USC on most income is deducted in real-time as and when the person is paid, the TWSS payments were not taxed in real-time and are instead liable to income tax and USC at the end of the year (2020).
Revenue will make a Preliminary End of Year Statement available to all employees in January 2021, including those who were in receipt of the TWSS. The Preliminary End of Year Statement includes information relating to an employee’s income received, including pensions and income from the Department of Employment Affairs and Social Protection, as well as their tax credit entitlements. For the tax year 2020, the Statement will also include information on the amounts of TWSS payments, if any, received by each employee. In addition, the Statement will provide employees with a preliminary calculation of the income tax and USC position for 2020 and will indicate whether their tax position is balanced, underpaid or overpaid for the year.
Upon viewing the Preliminary End of Year Statement through myAccount, which is Revenue’s secure online facility for individual taxpayer services, employees will have an opportunity to update their personal record, declare any additional income and claim any additional tax credits due, for example, qualifying health expenses, to arrive at their final liability for 2020.
Where a liability is finalised, individuals may opt to fully or partially pay any income tax and USC liability through the Payments/Repayments facility in myAccount. Where individuals do not opt to fully or partially pay, Revenue will collect the liability by reducing their tax credits over 4 years, interest free. The reduction of tax credits will start in January 2022.
On 25 September 2020, Revenue provided an update, by way of public announcement, as to how any tax liability arising on the TWSS will be dealt with. I am pleased to welcome this fair and flexible approach being taken by Revenue and I am confident that Revenue will continue to work with their customers to minimise any financial hardship to the greatest extent possible, noting that because of our progressive income tax system, in the vast majority of cases, the expected tax liability will be modest in scale.
404. Deputy Joe O'Brien asked the Minister for Finance if he will be re-engaging with an organisation (details supplied) in relation to a possible further mortgage moratorium for customers. [32479/20]
View answer407. Deputy Jim O'Callaghan asked the Minister for Finance if he plans to bring back mortgage moratoriums for commercial and residential loans; and if he will make a statement on the matter. [32554/20]
View answerI propose to take Questions Nos. 404 and 407 together.
On 18 March last, the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by banks and other lenders to help their customers who were economically impacted by the Covid-19 crisis. The measures included flexible loan repayment arrangements where needed, including loan payment breaks initially for a period up to three months and then subsequently extended for up to six months. This was a welcome initiative and it allowed necessary relief to be quickly and efficiently provided to borrowers.
Banks have now provided for flexible options for borrowers who can recommence payments following a Covid-19 payment break, and the BPFI has produced a useful guide on this - www.bpfi.ie/wp-content/uploads/2020/09/Final-BPFI-Coming-off-the-COVID-19-Payment-Break.pdf.
However, I am very conscious that many borrowers continue to be impacted by the economic consequences of Covid-19, and that they may not be in a position to resume their loan repayment commitments when their payment break ends or may be in difficulty now for the first time. I am fully aware of the stress and uncertainty that these borrowers are facing, and they will continue to need assistance and support from their lenders. As the Deputies know, the Tánaiste, the Minister for Public Expenditure and Reform and myself met the CEOs of the country’s retail banks and the Banking Payments Federation Ireland on 28 September to discuss this matter and we indicated that it is particularly vital that lenders work with their customers to ensure that suitable arrangements are put in place to assist their customers who are still experiencing difficulty. The lenders indicated that they will ensure that customers who have difficulties in meeting their loan repayments will be supported with a range of options so that a suitable arrangement can be agreed.
Borrowers have a suite of regulatory protections, such as the Central Bank's Code of Conduct on Mortgage Arrears, and lenders have specific obligations to support and work with borrowers who are continuing to experience mortgage or other loan difficulty because of Covid-19. These options could include additional flexibility, and this could be short term such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements. The Central Bank has confirmed that there is no regulatory impediment to lenders offering payment breaks to borrowers, providing they are appropriate for the individual borrower circumstance. Each individual’s position is different and that’s why a case-by-case approach is now the best approach as some sectors of the economy are more impacted than others.
I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection framework will be fully available to mortgage and other borrowers that will still need support due to the economic impact of Covid-19.
410. Deputy Christopher O'Sullivan asked the Minister for Finance if the owner of a traditional funfair will qualify for the employment wage subsidy scheme or other financial support (details supplied); and if he will make a statement on the matter. [32573/20]
View answerThe Deputy will be aware that the Employment Wage Subsidy Scheme (EWSS) provides a flat-rate subsidy to qualifying employers based on the number of paid and eligible employees on the employer’s payroll and charges a reduced rate of employer PRSI of 0.5% on wages paid which are eligible for the subsidy payment.
I am advised that Revenue having regard to the circumstances of the person concerned and the fact that he does not have any employees on the payroll and has not had any employees on the payroll during 2020, he is not eligible for the EWSS.
That said, for those businesses who need further support the Government has made a number of other options available, such as the recently announced Covid Restrictions Support Scheme (CRSS). Particular attention is also drawn to the comprehensive package of business and employer supports that have been made available as part of the July Stimulus Plan and Budget 2021 - including the Credit Guarantee Scheme, the SBCI Working Capital Scheme, Sustaining Enterprise Fund, and the Covid-19 Business Loans Scheme.
412. Deputy Ged Nash asked the Minister for Finance if his attention has been drawn to an independent report (details supplied) detailing the benefit of the existing retail export scheme on supporting tourism in Ireland; if his attention has been further drawn to the fact that other EU countries such as Spain and France have been reducing their thresholds for comparable retail export schemes in recent years to better position them to attract shoppers to their markets; his views on whether the proposed changes to the retail export scheme threshold rate in the Brexit (Omnibus) Act will severely diminish the competitiveness of tourist focused retailers nationwide, but particularly those in the tourism regions throughout Ireland with a high dependency on returning the United States, Canadian, Chinese and other established tourists; and if he will make a statement on the matter. [32653/20]
View answer413. Deputy Ged Nash asked the Minister for Finance if he will refrain from signing the commencement order of the Brexit (Omnibus) Act in order to provide an opportunity to review the amendments relating to the retail export scheme and make the necessary adjustments to minimise the impact on the existing tourist base whilst still addressing the concerns raised surrounding UK usage of the scheme; if he will retain the current threshold level at €0.01; and if he will make a statement on the matter. [32654/20]
View answerI propose to take Questions Nos. 412 and 413 together.
I have previously outlined the rationale for the changes proposed to the VAT Retail Export Scheme. This scheme enables visitors that are resident outside the EU to benefit from VAT relief on goods purchased in Ireland and subsequently taken outside of the EU. If the scheme applies to UK visitors post-Brexit without changes UK visitors will be able to buy goods VAT free in Ireland.
This could give rise to a considerable displacement of consumer purchases, resulting in significant VAT revenue losses, as purchases by UK visitors in Ireland would not produce any VAT revenues. Due to the volume of passenger movements between the UK and Ireland, the volume of refund applications is likely to significantly increase which simultaneously heightens the risk of abuse of the Retail Export Scheme post Brexit.
As I have previously advised, the measures in the Bill are precautionary and aim both to minimise the potential for abuse of the scheme and to reduce the possibility of diversion in retail consumption from Ireland to the UK, post Brexit.
The amended legislation proposed in the General Scheme of the Brexit Omnibus Bill 2020 provides for two elements to restrict the scheme. The first is a new requirement of proof of importation of the goods into the UK and the associated proof of payment, where applicable, of relevant UK VAT and duties, for the goods purchased under the scheme in order to qualify for a refund. The second is to provide that the value of qualifying goods must exceed €175 in value in order to be eligible for a refund under the scheme. This change is fully compatible with EU law and is in line with the EU VAT Directive. The monetary limit will apply in respect of all third country travellers who apply for a refund under the scheme, post commencement of the relevant sections.
The Ireland/Northern Ireland Protocol ensures that there will be no VAT Retail Export Scheme between Ireland and Northern Ireland. Any changes to the operation of the scheme will of course be kept under review by Revenue.
414. Deputy Ged Nash asked the Minister for Finance his views on reports that a company (details supplied) has paid €700 million in tax-free dividends to its parent company in the three years since the acquisition and did not have to pay corporation tax in 2019 despite revenue of €178.7 million and an operating profit of €74.5 million; if he will bring forward plans to address this matter; and if he will make a statement on the matter. [32655/20]
View answerThe Deputy has raised two points which I will deal with in turn, but I must first set out the parameters which must be respected when doing so. The Deputy will be aware that Revenue is statutorily bound to confidentiality in respect of taxpayer information and by law Revenue is prohibited from disclosing taxpayer information to third parties, including to Dáil Éireann. Section 851A of the Taxes Consolidation Act 1997 (or "TCA 1997") formalises taxpayer confidentiality and reassures taxpayers that their personal and commercial information disclosed to Revenue for tax purposes is protected against unauthorised disclosure by Revenue to third parties. Revenue is also obliged by section 851A TCA 1997 to ensure that information about individual taxpayers or a small group of taxpayers cannot be deduced from any statistical reports or similar information published by Revenue.
The Deputy’s first query concerned the payment of dividends from an Irish tax resident company to a non-resident shareholder without deduction of Irish tax. I am advised by Revenue that the general rule concerning dividend withholding tax or “DWT” is contained in section 172B TCA 1997. This provides that DWT at a rate of income tax of 25% applies to all ‘relevant distributions’ made by Irish resident companies, including payments of cash dividends. The DWT must be deducted at the time the distribution is being made and paid to Revenue by the 14th of the following month, unless the company has satisfied itself that the recipient is entitled to receive the distribution without the deduction of DWT. For example, section 172D(3) TCA 1997 provides an exemption from DWT in the case of certain non-resident persons which are resident for tax purposes in another EU Member State or a country with which Ireland has a double taxation treaty. Therefore, where an Irish tax resident company pays a dividend to a non-resident shareholder meeting the criteria set out in section 172D(3) TCA 1997, DWT does not have to be deducted from the dividend payment by the Irish tax resident company.
In relation to the Deputy’s second query, I would like to draw the Deputy’s attention to the overall framework for the taxation of income from a trade consisting of petroleum activities, a trade which is the focus of the Deputy’s question. The taxation of activities in the oil and gas sector is a specialised area and I am advised that Chapter 2 of Part 24 TCA 1997 contains a number of specific provisions which deal with the taxation of petroleum activities. Petroleum activities includes both petroleum exploration activities and petroleum extraction activities. For this purpose, petroleum has the same meaning as in section 2(1) of the Petroleum and Other Minerals Development Act 1960 and includes “any mineral oil or relative hydrocarbon and natural gas and other liquid or gaseous hydrocarbons and their derivatives”.
Companies involved in petroleum extraction activities incur significant costs in the context of both petroleum exploration activities and petroleum extraction activities and significant capital expenditure on production and development in connection with an oil or gas field. I understand that on the commencement of a trade of petroleum extraction by a company, all of its past petroleum exploration expenditure is deductible against the income from its petroleum activity. In addition, a 100% write down allowance is available for capital expenditure incurred on plant and machinery, assets or other works, buildings or structures, used in the carrying on of a petroleum extraction activity. This write down allowance is available from the date of production or development commenced in commercial quantities for the field in question. I am advised that any unutilised allowances on petroleum exploration expenditure and capital expenditure on production or development of an oil or gas field can be carried forward to shelter income in future trading periods.
Income from a trade consisting of petroleum activities is subject to corporation tax at the rate of 25%. Furthermore, it is important to note, that petroleum activities are ring-fenced from other trading activities to prevent erosion of the tax base which would result from non-petroleum profits being sheltered by deductions in respect of the substantial costs attributable to petroleum development.
I wish to emphasise that the information outlined above is provided so as to be helpful to the Deputy and in the context of Revenue’s specific confidentiality obligations. It relates to the general taxation rules applying to the payment of dividends from an Irish tax resident company to a non-resident shareholder and a trade consisting of petroleum activities. It does not relate to any specific entity or group of entities.
