Dáil Éireann Debate, Tuesday - 9 November 2021
141. Deputy Éamon Ó Cuív asked the Minister for Finance if he plans to increase the threshold on the small benefit exemption scheme on a once-off basis in 2021 in the Finance Bill to allow employers show appreciation to their staff for their commitment during Covid-19; and if he will make a statement on the matter. [54331/21]
View answerI am advised by Revenue that the small benefit exemption provides that a charge to tax will not arise where, subject to certain conditions, an employer provides a director or employee with a ‘qualifying incentive’.
A qualifying incentive may be a voucher or other tangible benefit, but it cannot exceed €500 in value. If the value of the incentive exceeds €500, then the entire amount is liable to income tax, PRSI and USC.
In addition, the incentive cannot be part of any salary sacrifice arrangement between the employee and employer. In the case of any voucher awarded, it must only be used to purchase goods or services and will not be a qualifying incentive for the purpose of this exemption if it is capable of being exchanged, in part or in full, for cash.
The legislative provisions set out that the small benefit exemption only applies to one qualifying incentive per year. Therefore, where an employer issues more than one qualifying incentive in a year then only the first of those incentives qualifies for this exemption. Any subsequent incentives issued by the employer will normally be liable to income tax, PRSI and USC irrespective of their value. However, in March 2020, Revenue concessionally agreed to waive this requirement.
For the 2020 and 2021 years of assessment the small benefit exemption may therefore apply to two qualifying incentives in each year. All other conditions relating to the small benefit exemption continue to apply in the usual manner. For example, the maximum cumulative value of the two incentives cannot exceed €500.
This concessionary measure was introduced to enable employers to recognise the efforts of their staff in light of the unprecedented impact of the COVID-19 pandemic. This concession therefore only applies to employees who have continued to work during the course of the pandemic.
Further information on the small benefit exemption is available on the Revenue website or in Tax and Duty Manual Part 05-01-01e.
I have no plans to make other changes to the small benefit exemption.
