Niall Collins (Limerick County, Fianna Fail)
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50. To ask the Minister for Finance if, following the recent change in approach to patronage share schemes, he will confirm that in the event of the Revenue Commissioners' position being upheld in a test case, he will change the legislation such that tax will not arise until the shares are sold, thus aligning it to the position now intended generally for share-based reward in an SME context; and if he will make a statement on the matter. [1733/17]

Michael Noonan (Limerick City, Fine Gael)
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This question relates to the taxation treatment of patronage shares issued by Kerry Co-Op. I am advised by Revenue that there has been no change in policy in relation to this matter and the position adopted by Revenue is in accordance with long established taxation principles.

Deputies will be aware that Revenue has committed to facilitate the appeals process should a taxpayer raise an appeal to the independent Tax Appeal Commission in relation to a tax assessment relating to the patronage share issue.

In relation to share based remuneration schemes, in general, employees are subject to income tax on share issues where the employer issues such shares and charges the employee less than the market value for them. Income tax is due on the difference in the relevant values and is generally collected via the PAYE system, while income tax due on share options must be returned within 30 days of the exercise of such options. In certain cases the relevant shares may be subject to a clog, restricting the employee from selling such shares for a set period of time. However, notwithstanding this restriction on sale, any income tax due is payable at the time of the share award.

A more favourable treatment may apply under certain Revenue Approved share schemes, but such schemes are subject to a range of restrictions, and are used primarily by larger, quoted companies.  Deputies will be aware that I announced my intention to introduce a new, SME focussed share-based remuneration incentive in Budget 2018.  This is a complex undertaking, as a focussed scheme of this nature will need to comply with State Aid regulations, and it is likely to require EU approval.

Therefore, in the years in which the patronage scheme was active, employees who received share based remuneration in an SME company would in most cases have been subject to income tax on any value received. As such, there would not appear to be a policy rationale to legislate for different treatment specifically for patronage shares in those years.  Furthermore, an amendment of the nature proposed by the Deputy would be retrospective, in that it would change the tax treatment of transactions occurring in the years 2011 to 2013.  Retrospective changes undermine the certainty of the tax system for all taxpayers and can be subject to Constitutional challenge in the courts, and would not be appropriate in this instance.

Niall Collins (Limerick County, Fianna Fail)
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51. To ask the Minister for Finance if, following the recent change in approach to patronage share schemes, a tax yield impact analysis of such a change in tax policy, taking into account the average effective rate of income tax of affected farmers, has been undertaken, balanced against the adverse impact of CGT yield at 33% and increased VAT flat-rate addition payable to farmers; and if he will make a statement on the matter. [1732/17]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy's question would appear to suggest that Revenue should, or indeed could, analyse a transaction and select a tax treatment based on the maximum potential yield for the Exchequer.  This is most certainly not the case as the Oireachtas sets out in legislation the relevant tax treatment that should be applicable to various sources of income or gains.

The Revenue Commissioners, as I have said already, are a statutorily independent body, charged with collecting the taxes lawfully owing to the Exchequer, and they do so in accordance with the legislation enacted by these Houses of the Oireachtas.  The Revenue Commissioners interpret the underpinning legislation and are charged with application of that law equally to ensure fair treatment of all taxpayers.

I would again reiterate that I have been advised by Revenue that there has been no change in policy in relation to this matter and the position being adopted by Revenue is in accordance with long established taxation principles that consideration received that is directly related to produce sold, whether in the form of cash or shares, is subject to taxation as income.

As there has been no change in policy by the Revenue Commissioners, I do not see the benefit of providing a tax yield impact analysis as sought by the Deputy. Such calculations are normally completed where a change of policy is being brought forward by Government and the associated estimated cost or yield is calculated in order to inform the Oireachtas in relation to the impact on the Exchequer of such a policy change. Such costings help to inform the associated debates in these houses. In this case however, the position is that the Revenue Commissioners are interpreting and implementing tax law as it stands and there has been no departure from existing policy and interpretation.

Depending on the particular circumstances and incomes of each taxpayer involved, the setting out of this tax treatment by the Revenue Commissioners could result in additional taxes being due, or indeed in a reduced tax burden for some. Calculation of a tax yield impact analysis in such a scenario, would be difficult and as outlined previously, unwarranted given the position of the Revenue Commissioners that there has been no change in practice on their part in terms of the appropriate tax treatment of such income.