Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I move amendment No. 14:

In page 11, between lines 25 and 26, to insert the following:“10. (1) The Principal Act is amended by inserting the following after section 112A:

“112B. (1)In this section—

‘benefit’ means a tangible asset other than cash;

‘qualifying incentive’ means either a voucher or a benefit that is given

to an employee by his or her employer in a year of assessment where

the following conditions are satisfied:

(a) the voucher or the benefit does not form part of a salary sacrifice arrangement;

(b) the voucher can only be used to purchase goods or services and cannot be redeemed, in full or in part, for cash;

(c) the voucher or the benefit cannot exceed €500 in value;

(d) not more than one voucher or benefit can be given to that employee in any year of assessment;

‘salary sacrifice arrangement’ means any arrangement under which an employee forgoes the right to receive any part of his or her remuneration due under his or her terms or contract of employment and in return his or her employer agrees to provide him or her with a qualifying incentive.

(2) A qualifying incentive shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.”.

(2) Subsection (1) comes into operation on 22 October 2015.”.

This amendment, if accepted, will result in the deletion of the existing section 10 from the Bill, as published, and its replacement with this text. The purpose of the amendment is twofold: to extend the exemption to include a small benefit in addition to a voucher; and to provide that the exemption applies to benefits and vouchers gifted to employees on or after 22 October 2015. The new section provides a legislative basis for a concession that is currently operated by the Revenue Commissioners. This will allow an exemption from income tax, PRSI and USC to an individual where an employer gives that employee a small benefit or voucher in a year of assessment. There are some restrictions, namely: the benefit or voucher cannot exceed €500 in value; it cannot be exchanged in part or in full for cash; it cannot be part of any salary sacrifice arrangement between the employee and employer; and only one benefit or voucher may be given in any one year. By changing the commencement provision, it will allow Christmas bonuses that meet the conditions to qualify for tax exemption this year. It is the practice of some employers to give some benefit, Christmas bonus or voucher to employees at this time. Up to now, they could give a voucher to the value of €250 and this was not taxable. The amount will now be increased to €500 and it will not be subject to income tax.

The principal reason for the new draft is that after the Bill was published, it was pointed out to me that it would only come into effect on 1 January and would, therefore, be of no benefit to people this Christmas. I am bringing the effective date forward to 22 October - the date on which the Bill was published - in order that employers will be free to increase the value of the bonuses or vouchers they give to employees. In a way, this mirrors what is being done by the Department of Social Protection in terms of paying increased Christmas bonuses to persons on welfare payments. The amendment will give rise to a small benefit for people at work.