Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move amendment No. 98:

In page 95, between lines 35 and 36, to insert the following:“Vouched Travel Expenses

85. The Principal Act is amended by insertion the following section after section 195A:

“195B. (1) In this section—

‘expenses’ means vouched expenses;

‘normal place of work’ means the location where an employee or director undertakes the majority of the activities of their employment/office;

‘relevant employee or director’ means an employee or director who undertakes activities at a temporary place of work and whom incurs additional travel and subsistence expenses arising from that fact, other than that which they would have otherwise incurred;

‘temporary place of work’ means a location where an employee or director is required to travel to undertake activities for a temporary period not exceeding 24 months.

(2) This section applies to payments made by a company to or on behalf of a relevant director or employee of that company in respect of expenses of travel and subsistence incurred by the employee or director solely for the purpose of undertaking activities at a temporary workplace.

(3) So much of a payment to which this section applies shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.”.

This is a hot topic. The Revenue Commissioners undertook the national contractors project which yielded significant revenues for the State. It was a significant initiative by Revenue to examine the issue of the tax treatment of travel and subsistence payments for self-employed contractors.

I welcome that the Minister held a public consultation on this area a number of months ago and I know a number of submissions were made to that public consultation exercise. We are talking about contractors working across the information and communications technology and health care sectors in particular, and the tax treatment of costs associated with contractors working away from their normal place of work.

The point made to me is that the current system and interpretation from the Revenue Commissioners has caused some uncertainty. I assume the Minister may accept that to a point as he has initiated the public consultation. The point has also been made that our capacity to deliver on major capital projects, with very large companies seeking to bring in the required expertise on a contracting basis, is meeting difficulties. The issue must be examined.

It is some time since I studied the tax law surrounding deductible expenses for employees but the general rule of thumb about an expense being wholly, necessarily and exclusively incurred in the performance of the duties is, I presume, still the test used by the Revenue Commissioners. Many of these contractors, by the nature of their job, move between locations. I would have thought the expenses incurred in doing that job are inextricably linked to the performance of their duties in the course of that job and would be deductible, but there seems to be a different interpretation put on it. There is also the acceptance of whether a person's home can be the normal place of work, which it is for some contractors. For example, that would be the case for some people providing information technology support. Many of these people have received very hefty tax bills, perhaps legitimately, and I am not holding a candle for anybody trying to avoid their taxation responsibilities.

I suggest there is a need for certainty in the taxation treatment of self-employed contractors and we must be cognisant of the ability of major employers in this country to deliver on capital investment projects and have access to the required expertise in this country. The nature of the working environment has changed and more people are now self-employed. They have incorporated and are offering their services as an independent contractor. We are dealing with old taxation legislation and although I welcome that the consultation has been done, will the Minister's Department and the Revenue Commissioners, if they have not done so already, consider very carefully the submissions and bring certainty to the issue in order that it can be clearly explained to all the stakeholders, the Tax Institute, employer bodies, large companies and the contractors? We should have clear rules on how travel and subsistence payments in particular should be taxed and this should be consistent.