Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

As I understand it, this group of amendments seeks to classify tips and gratuities as a gift from a customer. The Deputy's purpose is to extend the tax treatment of personal gifts to tips and gratuities received in the course of employment, which would mean that they would be liable for capital acquisitions tax, rather than income tax. Having considered this issue and consulted with the Revenue Commissioners, while a tip may be perceived as a gift in the sense that it is a voluntary payment, it is in fact a reward for good services rendered during the individual's employment. This is a key legal distinction between a personal gift and a tip.

If the individual is not working in that position, they would not have received a tip. Tips are explicitly linked to the service being provided by the recipient in the course of their employment. They are not made on grounds that are purely personal to the individual, in the way that a birthday or wedding gift would be. They are inextricably linked to the person's employment. Therefore, I am advised that, for these legal reasons, a tip could not be classified as a gift. I am advised that this interpretation is supported by case law and recent determinations by the Tax Appeals Commission.

With regard to a group booking charge, it is possible for a restaurateur or hotel, or an events organiser, to impose a group booking surcharge. Sometimes, that is necessary, because extra staff have to be taken on and perhaps paid premium pay. What is very clear from this legislation is that the surcharge could not be described as a service charge. It would be very clear to the customer that this was not a service charge and was not going to staff in addition to their wages.

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