Dáil Éireann Debate, Tuesday - 5 July 2022
182. Deputy Cathal Crowe asked the Minister for Finance if his Department will consider a relaxation of rules on a temporary basis to allow employers to pay a fuel allowance to their workers without having it taxed, a measure which could be rescinded once fuel prices stabilise. [35974/22]
Amharc ar fhreagraThe Government is acutely aware of the increase in consumer prices in recent months, especially the increase in fuel and other energy prices including home heating oil, and for this reason it recently introduced a package of measures to alleviate the impact of increased energy prices on households.
These measures built on measures already introduced in Budget 2022, provides support to all domestic electricity users via a €200 energy credit and also provides targeted support to vulnerable households via the welfare system. Low income households have received an overall increase of 55% in Fuel Allowance support provided during the most recent Fuel Allowance season as compared to the previous season taking the €5 increase in the weekly payment introduced as part of the Budget last October, the €125 lump sum payment provided earlier this year together and the €100 extra May payment.
The Government also announced a temporary reduction in the excise duties charged on petrol, diesel and marked gas oil. This measure, to the value of €320 million, was introduced with effect from 10 March reducing the VAT inclusive excise duty on petrol, diesel and Marked Gas Oil (MGO) by 20, 15 and 2 cent per litre respectively. These reductions mitigate the cost of a fill of a 60 litre tank by some €12 for petrol and €9 for diesel. This assists all transport users, rural and urban, including commuters, business and farmers. These measures have been extended to 11 October 2022, with an additional 3 cent reduction for MGO at an additional cost of €97m.
In addition to these measures, the Government took the decision to reduce the rate of VAT on the supply of gas and electricity from 13.5% to 9% until October 31, 2022, costing an estimated €46m and resulting in estimated annual savings of €49 on gas and €69 on electricity bills for households.
I would also draw the attention of the Deputy to the "small benefit exemption". Where an employer provides an employee or director with a small benefit, that is, a voucher or a benefit (a tangible asset other than cash) with a value not exceeding €500, that benefit 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.
The conditions 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 value of the incentive does not exceed €500; and
- the incentive does not form part of a salary sacrifice arrangement.
Where all of the conditions are not satisfied, the exemption does not apply and the benefit is subject to tax in the usual way, in accordance with section 112 TCA 1997.
Following the start of the COVID-19 pandemic, Revenue has in certain circumstances concessionally waived the requirement that only one voucher issues per year for the 2020 and 2021 tax years and has permitted an employer to issue two vouchers to the (maximum) value of €500. This concessionary treatment continues to apply for 2022. It applies where the additional award is related to an employee's exceptional efforts during the COVID-19 pandemic and where the employee continued to work during the restricted period.
All other conditions of section 112B TCA 1997 must be met, for example the maximum cumulative value of incentives must not exceed €500 and the voucher or incentive must not be redeemable, in full or in part, for cash. Appropriate documentation must be retained by an employer where this concession is availed of.
The Deputy will be aware that it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
