Brian Cowen (Laois-Offaly, Fianna Fail)

With regard to the Deputy's first amendment, I pointed out on Committee Stage that tax law provides an exemption for an employee benefit-in-kind tax charge where employers provide their employees with monthly or annual travel passes. For the exemption to apply, the employer must bear the cost of the travel pass. Subsequent to the introduction of the scheme, representations were made to Revenue to ascertain whether employers could provide the free passes within existing employment costs and following consideration of the matter, Revenue approved arrangements known as a salary sacrifice, whereby employees could renegotiate their remuneration package to accept a reduction in salary and obtain a travel pass of equal value in return. To ensure the renegotiated arrangements are genuine, they must last for at least 12 months.

Under the salary sacrifice arrangements, the employer is regarded as incurring the cost of the travel pass and, accordingly, the exemption applies. The arrangement was set out in tax briefing No. 41, copies of which can be made available for Members who wish to view it, and it is also well publicised by transport companies. The 12-month period in the salary sacrifice has given rise to the assumption that only annual tickets may be used in the scheme. The legislation provides for both monthly and annual passes to be used. In general, where salary sacrifice is in place, it would be more effective from a cost angle for employees and from an administrative angle for employers to use annual rather than monthly passes. Quarterly tickets do not come under the remit of the scheme, as transport companies do not provide them in general.

When the travel pass scheme was introduced, representations were made by my Department to Dublin Bus in respect of those with atypical employment patterns to ascertain whether an appropriate ticket scheme could be introduced. Due to the variances in work patterns, the company indicated it would not be administratively possible to address these needs. However, individuals with atypical work patterns may be supplied with annual or monthly passes and use them throughout the relevant period, irrespective of their work pattern. The amendment is, accordingly, unnecessary.

With regard to amendment No. 18, travel passes incurred by an employee in the performance of the duties of his or her employment are deductible for tax purposes and, therefore, the amendment is also unnecessary. However, if the Deputy is seeking to extend the current provision to cover the cost of travelling to work, which is not regarded as being in the performance of an individual's duties, this would have a serious cost implication for the Exchequer and I oppose the amendment on that ground.

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