Dáil Éireann Debate, Tuesday - 23 April 2024
208. Deputy Louise O'Reilly asked the Minister for Finance if any consideration has been given to increasing the tax-free threshold for travel and subsistence payments known as country money within the construction sector; and if he will make a statement on the matter. [17691/24]
View answerThe legislation governing the deductibility of expenses incurred in employment is contained in section 114 of the Taxes Consolidation Act 1997 (TCA). To qualify for tax relief under this section, any travelling expenses must be necessarily incurred in the performance of the duties of the relevant employment. For all other expenses, they must be wholly, exclusively and necessarily incurred in the performance of the duties of the relevant employment.
Under established case law, expenses incurred by a taxpayer in travelling to his or her normal place or places of work are generally not deductible under section 114 and therefore not allowed to be paid tax-free to the employee. The reason is that the expense is not incurred in the performance of the duties of the employment, rather it is incurred merely to put the individual in a position to perform those duties. This means that, where such payments are made that do not fall within the criteria of section 114, they are subject to tax through the PAYE system by the employer.
Revenue has operated an administrative practice known as ‘country money’ in relation to employees in the construction sector for over forty years. This allows for reimbursement by an employer, without deduction of tax, of expenses of travel, including subsistence, necessarily incurred by an employee in the course of their duties. While this may be operated on the basis of vouched expenses, Revenue allows the payment of certain set sums of money tax-free to employees in the construction industry while they are assigned to sites that are remote from their place of employment.
The employee must be employed and working at a site that is 32km or more from the employer’s base. The current rates for ‘country money’ are a maximum of €181.68 per week for more than four days or €36.34 per day for four days or less.
‘Country money’ may not be paid tax-free where the employee is provided with transport to and from the site by the employer, provided with board and lodgings by the employer or is recruited to work at one site only (also known as ‘jobbed on site’ employees).
The payment of ‘country money’ does not prevent an employee from making a claim for deduction from tax of actual expenses incurred, where the conditions of section 114 TCA are met. However, in these circumstances, any amount of ‘country money’ or other reimbursement of expenses paid is treated as additional emoluments and taxed accordingly through the PAYE system.
Having regard to how the modern day working environment has evolved since this administrative practice was first introduced, together with changes in work practices generally and case law considerations, Revenue advises that it would be necessary to carry out a full review of the 'country money' administrative practice, prior to making any changes, including any changes to the rates. As part of this review, consideration would need to be given to the viability of continuing it as an administrative practice, rather than providing for it specifically in tax legislation.
It is envisaged that a review of the 'country money' administrative practice by Revenue would be a significant piece of work. Revenue has confirmed to me that while there are no immediate plans to commence a review, or to make any changes to the current administrative practice (including the rates), it will keep this matter under active consideration.
