Dáil Éireann Debate, Wednesday - 6 June 2012
94 Deputy Dominic Hannigan asked the Minister for Finance his plans to allow civil unions or married couples combine their tax allowances for public transport; and if he will make a statement on the matter. [26883/12]
Amharc ar fhreagraThe tax exemptions for the travel pass scheme operates on two levels in order to ensure that the taxation benefits are given to employees. Firstly, where a travel pass is provided in addition to normal remuneration the taxable BIK that arises on its provision is exempt from tax in the hands of the employee under section 118(5A) of the Taxes Consolidation Act 1997.
However, many travel pass schemes operate under what are known as salary sacrifice arrangements. These are arrangements under which an employee agrees with his or her employer to take a cut in remuneration and in return the employer incurs the cost of providing a benefit of a corresponding amount to the employee (that is, a bus, rail or ferry pass).
As a general rule, Revenue does not regard salary sacrifice arrangements as reducing an employee's taxable income. If an employee foregoes salary payable under an existing contract of employment in exchange for a benefit, the employee remains taxable on the "gross" income payable. An exception to this rule is made in the case of the travel pass scheme. Under section 118B of the Taxes Consolidation Act 1997 where an employee is provided with a travel pass, the employee will not be chargeable to tax on the remuneration sacrificed. The corresponding cost to the employer of the travel pass does not, as stated above, give rise to a BIK tax charge on the employee who receives the travel pass.
I am informed by the Revenue Commissioners that if the couple concerned are jointly assessed the tax relief is, in fact, provided at the couple's marginal rate of tax (i.e. either 20% or 41% depending on the rate of tax applicable to the couple). If the couple is not currently being jointly assessed to tax they should contact their local tax office with a view to ensuring that joint assessment applies to them if this is what they want.
(The issue of determining the boundaries of areas falling within the scope of the all-in-one commuter / Dart and Luas ticket is a matter for the Minister for Transport, Tourism and Sport in consultation with the approved transport service providers.)
