Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael)
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I am taking this matter on behalf of the Minister for Finance, who will be signing the commencement order. He states that the new requirements under which employers must report to Revenue certain non-taxable benefits paid to their employees or directors were introduced in section 9 of the Finance Act 2022. These reportable benefits are the remote working daily allowance of €3.20, untaxed travel and subsistence payments, and qualifying incentives under the small benefit exemption. The Senator's point in respect of a bunch of flowers is a concern. It is probably worth clarifying that further. That does not seem like a business expense. It is clear that more information is needed, and I undertake to get that for the Senator. The provision was made subject to a commencement order so as to allow sufficient time for stakeholder engagement and IT developments. I note the Senator’s request for a delay but the intention of the Minister is to sign the commencement order and for it to commence from 1 January 2024.

The objective of the reporting is to provide Revenue with timely quality data in support of service and compliance activities and to provide information to assist the Department of Finance with policy-making considerations and tax expenditure reviews. There is a cost to the Exchequer in terms of tax foregone in respect of these tax exemptions and, although it is not expected to be significant, the exact cost cannot currently be ascertained due to the fact that there is no reporting to Revenue in respect of such measures. In addition, the additional data, which has certain compliance controls embedded at reporting stage, will allow Revenue to further develop and inform its compliance risk framework. The aim in that regard is to help to target compliance contacts where required and minimise compliance interventions on compliant employers and the associated costs to the employer and Revenue of so doing.

Preparations for implementation of the new reporting requirements have been a major project of work within Revenue for the past year. There has been a major effort in respect of stakeholder engagement in that time, with Revenue also investing in IT developments to facilitate the new requirements. Software developers and providers have been extensively consulting with Revenue for the past year and have invested in upgrading their products in anticipation of the implementation of the new reporting requirements from 1 January 2024.

Revenue has engaged extensively with a wide variety of stakeholders through the past 12 months as part of the implementation strategy. That included a survey and direct engagements with employers, software providers, agents, representative bodies, beginning earlier this year and continuing more recently with wider stakeholder engagement through an extensive series of webinars delivered from September through to December. Detailed guidance and FAQ material on the new requirements and filing mechanisms, together with informational videos, have been published on the Revenue website. Further guidance and information is provided in the recently updated tax and duty manual part 38-03-33.

In terms of actions to reduce the administrative burden on employers, Revenue has designed the reporting requirements to integrate seamlessly with payment processes based on stakeholder feedback. It is trying to get that working as efficiently as possible. Revenue has confirmed that all three mechanisms for making the returns will be familiar to employers as they are the same as those for reporting payroll. For employers who do not use payroll or other financial software, a manual reporting mechanism is available through the Revenue online service. Furthermore, Revenue has been working and will continue to work with employers to assist them in complying with the new requirements.

Ultimately, the new reporting regime does not impose any additional checks by employers to ensure the conditions of the relevant tax exemption have been met. The data being requested are high-level information which the employer already has an obligation to record. Revenue understands that, for the majority of cases, the reporting of the benefit or payment should align with existing business practices and is satisfied that the real-time reporting requirements should not significantly impact on business processes. Any change is difficult, however, and Revenue will be there to help facilitate this change through the next year.

Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael)
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The Senator is right. Anything that increases the administrative burden is difficult, particularly in the first instance. That is why it is important to have a flexible approach to begin with. Once one gets into a new reporting practice, however, it tends to be embedded in the practices of the business. If we can get to a point where more compliant businesses are being audited less frequently or having to draw less attention from Revenue, there is a benefit in the long run for already compliant businesses. I appreciate this is a new measure. It will enhance tax transparency, but it is a new requirement on businesses. I take on board the Senator's broader point in respect of small businesses and the supports that are important for them. We have introduced several schemes that are important for society, such as those relating to sick pay and different forms of leave, but they are difficult in many respects for small businesses, particularly those with few employees, to absorb. I recognise that. There must be a balance within that all the time. We have made significant improvements to the workplace environment in general but we must recognise that small businesses are the engine of the economy and we must support them.