Thursday, 5 March 2020

Ceisteanna (81)

Niamh Smyth


81. Deputy Niamh Smyth asked the Minister for Finance the status of plans to change flat rate expenses and the reclaiming of same; the way in which this will impact on teachers; if the case of a person (details supplied) will be reviewed and the concerns outlined will be addressed; and if he will make a statement on the matter. [2868/20]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I would like to advise the Deputy that all employees have a statutory right to claim a deduction under section 114 of the Taxes Consolidation Act (TCA) 1997 in respect of an expense incurred wholly, exclusively and necessarily in the performance of the duties of their employment, to the extent which the expenses are not reimbursed by the employer.

The flat rate expense (FRE) regime is an administrative practice operated by Revenue to ease the administrative burden on Revenue and on employees in certain sectors by facilitating the automatic granting of a fixed tax allowance to cover allowable employment-related expenses, without the need for annual claims by every employee concerned.  It applies where both specific commonality of expenditure exists across an employment category and the statutory requirement for a tax deduction for expenses as set out in section 114 TCA 1997 is satisfied. 

I am advised by Revenue that it remains committed to the FRE regime and encourages all taxpayers to avail of their full tax relief entitlements. 

I am aware that Revenue has recently completed a comprehensive review of their FRE regime. The purpose of the review, which involved engagement with relevant representative bodies, was to ensure that the expenses granted to each employment category remain justified and appropriate to modern day employments and work practices.  Each category of FRE allowance was examined separately in the light of the legislative requirements of section 114 of the TCA 1997, which provide that expenses are tax deductible only if they are wholly, exclusively and necessarily incurred by the employee in the performance of the duties of his or her employment and are not reimbursed by the employer. 

Revenue recently announced its decision to defer the implementation of any planned changes to the FRE regime until 1 January 2021, to allow time, as part of the annual Tax Strategy Group process, for the examination of a number of policy matters that were raised during Revenue’s review . 

Consequently, there will be no change to FRE allowances for 2020, including the allowances available to teachers. Teachers will be entitled to the same FRE allowance in 2020 as was available to them in 2019.

I am advised by Revenue that it remains committed to the FRE regime and encourages all taxpayers to avail of their full tax relief entitlements.