Dáil Éireann Debate, Wednesday - 18 October 2023
111. Deputy Emer Higgins asked the Minister for Finance whether an employer can provide part of an employee's annual bonus as a voucher under the small benefit exemption; and if he will make a statement on the matter. [45647/23]
View answerAn employer may provide up to two small benefits, with a combined value of both provided benefits not exceeding €1,000 in a year of assessment, which will be exempt from Income Tax, PRSI and USC, provided all of the conditions contained within section 112B of the Taxes Consolidation Act 1997 are satisfied. This relief is commonly referred to as the “Small Benefit Exemption”.
The main conditions for the relief are as follows -
• the incentive is provided in the form of a voucher or other non-cash item;
• where the incentive provided is in the form of a voucher, this voucher must only be for the purchase of goods or services and must not be capable of being exchanged in part or in full for cash;
• the total value of the incentive(s) does not exceed €1,000; and
• the incentive does not form part of a salary sacrifice arrangement.
If more than two incentives were issued in a year of assessment, it is only the first two which could qualify for the Small Benefit Exemption.
The facts and circumstances of each case must be considered on their own merits when determining if the Small Benefit Exemption may apply. However, where an employee gives up a right to an entitlement (in this case a bonus) it may, fall within a salary sacrifice arrangement and therefore the Small Benefit Exemption may not apply.
Where all of the conditions are not satisfied, the Small Benefit Exemption does not apply and the benefit is subject to tax in the usual way, in accordance with section 112 TCA 1997.
Further information on the Small Benefit Exemption is available on Revenue’s website, available at the following link - www.revenue.ie/en/employing-people/benefit-in-kind-for-employers/valuation-of-benefits/small-benefit-exemption.aspx
