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

I move amendment No. 26:

In page 103, between lines 28 and 29, to insert the following:“87. 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.”.”.

Again, this issue was debated on Committee Stage and the amendment arises from that. This issue relates to the taxation of certain independent contractors. As the Minister of State knows, the nature of work practice and employment has changed very considerably in this country and an increasing number of people are self-employed. They are establishing their own companies and offering their services as independent contractors. That has raised certain taxation issues. I know the Revenue Commissioners have paid quite a lot of attention to this area and they have had what they call the national contractors project, which has identified issues whereby individuals have not been paying the correct amount of tax. This raises serious issues for the individuals and their tax advisers. I am certainly not holding a candle for anybody who is deliberately evading their taxation responsibilities, but we need clarity in respect of travel and subsistence payments for independent contractors who are self-employed.

I acknowledge that the Department and Revenue held a public consultation exercise earlier this year. That was a very important step forward and it recognised that where large multinationals are undertaking major capital projects, particularly in areas such as ICT and health care, they are finding it increasingly difficult to access the pool of expertise they require from contractors. That is why we need a transparent system in respect of the taxation of travel and subsistence payments for those working away from home. There is the rule of thumb that for an expense to be tax deductible in an employment sense, it has to have been incurred wholly, exclusively and necessarily in the performance of the person's duties. This issue relates primarily to the costs associated with working away from a person's normal place of work and the amendment seeks to address that issue. I am putting it on the agenda because there seems to be a lack of clarity.

Revenue is putting a certain interpretation on the taxation law as it applies to this sector which is having an impact. It is obviously having an impact on the individuals, but it is also having an impact on multinationals which are seeking to invest in the country and to ensure that major capital projects can be delivered, which projects necessarily involve a significant input from independent contractors. We need clarity, transparency and consistency of treatment. That is primarily what this amendment seeks to achieve.

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