Paul Gavan (Sinn Fein) | Oireachtas source

I move recommendation No. 5:

In page 11, after line 34, to insert the following:

“Report on operation of income tax relief for cross-border workers

11.The Minister shall, within six months of the passing of this Act, prepare and lay before both Houses of the Oireachtas a report on the operation of income tax relief for cross-border workers under section 825A of the Taxes Consolidation Act 1997, including the consideration of options to regularise the temporary relief granted by the Revenue Commissioners under that section in response to Covid-19 and further measures to facilitate cross-border workers in the future.”.

I know the Minister of State is familiar with this particular amendment from my colleague, Deputy Pearse Doherty, in the Lower House and that he has had good conversations on it. He will be aware that there is a relief in our tax code known as the transborder workers' relief, which people can claim if they are working wholly outside of the State that is the jurisdiction and commuting to work. In most cases, this involves people working on a cross-Border basis. In other cases, people resident here could be commuting to Manchester or London and be working five days per week in Britain or elsewhere. Again, the problem in this area has been exposed by the pandemic, but, in fairness, Revenue and Department were quick to act on it.If people carry out any work that is more than incidental in this jurisdiction, they will lose this trans-border relief. For example, if people work from home for one day or half a day, they lose this relief. That would be the case as long as it was deemed something more than incidental.

As a result of the pandemic, the Revenue waived the requirement because we are obviously trying to encourage people not to travel. However, that is not the issue. The issue concerns changing work patterns. For example, if an employee living in Donegal and working in a company in Derry is availing of this relief, it will mean the tax the person pays is calculated in Derry and there is no tax liability in this State. If the person works one day from home, however, that will all be gone. He or she will have a tax liability here and the difference between what will be applicable in Derry and this State would have to be paid to the Revenue here.

Let us consider the reverse case, where an employee is resident in Derry and working in a company in Letterkenny. That employee could work from home for up to something like 60 days and still be able to gain the relief. I am not suggesting this should be right across the board. There is, however, a need to carve out space within our Finance Bill regarding these cross-border workers on the island of Ireland.

I mentioned looking at this issue through the prism of Brexit and in respect of the Good Friday Agreement. I do not believe we should allow those who live on one side of the Border and who work on the other side to work remotely most of the year. However, we should try to bring the situation into line with what happens in the North. We should allow for several days where people can work from home. It could be for different reasons. It could be a case where two partners are working. One could be a nurse, a teacher or someone working on the front line. Perhaps a child is sick on a given day and the worker who was supposed to travel to Derry cannot do so and works from home instead. If that person works from home on any substantive issue, anything more than something incidental, he or she stands to lose the trans-border relief. There should be flexibility built into the scheme to ensure it is possible for people to work in their place of residence for several days and still be able to avail of the relief.

An energetic group has been established to represent cross-border workers. It is an important issue that affects many people. I am not stipulating what the number of days should be. The Minister can decide that. It could start with 12 or 14 days or whatever number of days he chooses. There must be some flexibility, however, because it is far too rigid now. The criteria state that the employment duties must be wholly exercised outside the State with none performed in the State, save for duties considered incidental to the foreign employment. That is a situation of a bygone day.

Although we have double taxation arrangements, where there is offsetting of tax from one jurisdiction to the other, trans-border relief is a different matter. We must build into our tax code for workers resident here but working outside the jurisdiction the flexibility to prevent the complete loss of the trans-border relief if the workers work from home on a certain number of days in the calendar. This recommendation simply calls for a report to examine all these important issues and I hope the Minister of State will support same.