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

I move:

(1) THAT section 112B of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended in subsection (1)–

(a) by the substitution of the following definition for the definition of “qualifying incentive”:

“ ‘qualifying incentive’ means a relevant incentive that is the first or the second relevant incentive given to an employee in a year of assessment where–

(a) in the case of a first relevant incentive, the value does not exceed €1,000, and

(b) in the case of a second relevant incentive, the cumulative value of the first and second relevant incentives does not exceed €1,000;”,

(b) by the insertion of the following definition:

“ ‘relevant 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;”, and

(c) in the definition of “salary sacrifice arrangement”, by the substitution of “relevant incentive” for “qualifying incentive”.

(2) THAT this Resolution shall have effect on and from 28 September 2022.

(3) THAT paragraph (1) of this Resolution shall apply for the year of assessment 2022 and subsequent years.

(4) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the

Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

I welcome the opportunity to speak on the resolution which deals with section 112B of the Taxes Consolidation Act 1997, the so-called small benefit exemption. The exemption currently allows an employer to provide an employee or director with a small non-cash benefit that is a voucher or benefit with the value not exceeding €500 without the benefit being liable for income tax, PRSI or USC, provided all the conditions contained within section 112B of the Taxes Consolidation Act 1997 are satisfied.

These include that the reward benefit cannot be exchangeable for cash or part of a salary sacrifice arrangement.

The resolution will increase the limit of the small benefit exemption to €1,000 and the number of benefits in a year that an employer can give will be increased from one to two per year. It is, therefore, a maximum total of €1,000 in a year. It comes in light of the decision the Government made to provide a tax-free payment of €1,000 to many public servants involved in the response to the pandemic. This increased limit and permitting two small benefits in a calendar month will allow employers greater scope to grant employees non-cash awards tax free. The resolution, if passed, will have effect from tonight, which means it will apply in this current tax year. Even if an employer has already given the benefit of €500 this year, that employer can give a further voucher for up to another €500 this year as a tax-free bonus.

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