Cathal Crowe (Clare, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

113. To ask the Minister for Finance if the rules in relation to flat-rate expenses will be amended to include podiatrists and chiropodists (details supplied). [46651/22]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Section 114 of the Taxes Consolidation Act 1997 (TCA) provides for a tax deduction in respect of expenses incurred wholly, exclusively and necessarily by an individual in the performance of the duties of his or her employment.

The flat rate expense (FRE) regime is operated by Revenue on an administrative basis where both a specific commonality of expenditure exists across an employment category and the statutory requirement for the tax deduction as set out in section 114 of the Taxes Consolidation Act (TCA) 1997 is satisfied, namely, that the expenses are wholly, exclusively and necessarily incurred in the performance of the duties of the office or employment by the employee concerned and that such expenses are not reimbursed by his or her employer.

The FRE regime was established to apply a uniformity of approach to tax deductibility for expenses of large groups of employees and to facilitate ease of administration for both Revenue and employees. The expense should apply to all employees in that category and not be discretionary.

Chiropodists and podiatrists

Revenue has advised me that it will consider FRE applications where a large number of employees incur broadly identical qualifying expenses which are not reimbursed by their employer.

Applications are generally made by the representative bodies in the employment sector concerned and are considered by Revenue based on the specific commonality of expenses within the employment category and compliance with the strictly applied, statutory requirement for a tax deduction.

I am advised by Revenue that a submission to apply a FRE, in respect of chiropodists and podiatrists has not been made to them. Should such a submission be submitted from the representative body, outlining the expenses incurred by chiropodists and podiatrists, which satisfy the legislative conditions, it will be considered by Revenue.

Notwithstanding that an FRE is not in place for chiropodists or podiatrists, as for all employees, they retain their statutory right to claim a deduction under section 114 of the TCA 1997 in respect of an expense incurred wholly, exclusively and necessarily in the performance of the duties of their employment, to the extent to which the expenses are not reimbursed by the employer or not already included in the relevant FRE amount.

The quickest and easiest way to claim tax relief for qualifying employment expenses (including any FRE) is to complete an online Income Tax Return. This return can be found in the PAYE Services tab in myAccount on the Revenue website.

Detailed guidance on membership fees paid to a professional body is available on Revenue’s website:

www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-02-18.pdf.

Further guidance on the general rule of deduction of expenses in employment is also available on Revenue’s website: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-02-20.pdf.

Michael Healy-Rae (Kerry, Independent)
Link to this: Individually | In context | Oireachtas source

114. To ask the Minister for Finance if increases in benefit-in-kind that are due to take effect on 1 January 2023 as a result of changes brought in by the Finance Act 2019 will be postponed (details supplied); and if he will make a statement on the matter. [46653/22]

Joe Carey (Clare, Fine Gael)
Link to this: Individually | In context | Oireachtas source

119. To ask the Minister for Finance if the proposed changes to the benefit-in-kind on company cars which will then be calculated with reference to CO2 emissions will be implemented in January 2023; the changes that will be introduced to help offset the dramatic additional cost to both the employer and employee; and if he will make a statement on the matter. [46719/22]

Michael Creed (Cork North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

124. To ask the Minister for Finance if he will review the activation of section 6 of the Finance Act 2019 as it relates to liability for benefit-in-kind for employees with company cars given that presently the availability of lower emission, hybrid and electric vehicles is significantly curtailed thereby constraining employers and employees in their efforts to move to more sustainable motoring; and if he will make a statement on the matter. [46811/22]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I propose to take Questions Nos. 114, 119 and 124 together.

At the outset, the Deputy should note that recent Government policy has focused on strengthening the environmental rationale behind company car taxation. Until the changes I brought in as part of the Finance Act 2019, Ireland’s vehicle benefit-in-kind regime was unusual in that there was no overall CO2 rationale in the regime. This is despite a CO2 based vehicle BIK regime being legislated for as far back as 2008 (but never having been commenced).

In Finance Act 2019, I legislated for a CO2-based BIK regime for company cars from 1 January 2023. From that date the amount taxable as BIK remains determined by the car’s original market value (OMV) and the annual business kilometres driven, while new CO2 emissions-based bands will determine whether a standard, discounted, or surcharged rate is taxable. The number of mileage bands is reduced from five to four. EVs will benefit from a preferential rate of BIK, ranging from 9 – 22.5% depending on mileage. Fossil-fuel vehicles will be subject to higher BIK rates, up to 37.5%. This new structure with CO2-based discounts and surcharges will incentivise employers to provide employees with low-emission cars.

I am aware there have been arguments surrounding the mileage bands in the new BIK structure as they can be perceived as incentivising higher mileage to avail of lower rates, leading to higher levels of emissions. The rationale behind the mileage bands is that the greater the business mileage, the more the car is a benefit to the company rather than its employee (on average); and the more the car depreciates in value, the less of a benefit it is to the employee (in years 2 and 3) as the asset from which the benefit is derived is depreciating faster. Mileage bands also ensure that cars more integral to the conduct of business receive preferential tax treatment.

I believe that better value for money for the taxpayer is achieved by curtailing the amount of subsidies available and building an environmental rationale directly into the BIK regime. It was determined in this context that reforming the BIK system to include emissions bands provides for a more sustainable environmental rationale than the continuation of the current system with exemptions for electric vehicles (EVs). This will bring the taxation system around company cars into step with other CO2-based motor taxes as well as the long-established CO2-based vehicle BIK regimes in other member states.

In addition to the above and in light of government commitments on climate change, Budget 2022 extended the preferential BIK treatment for EVs to end 2025 with a tapering mechanism on the vehicle value threshold. This BIK exemption forms part of a broader series of very generous measures to support the uptake of EVs, including a reduced rate of 7% VRT, a VRT relief of up to €5,000, low motor tax of €120 per annum, SEAI grants, discounted tolls fees, and 0% BIK on electric charging.

Finally, it should be noted that this new BIK charging mechanism was legislated for in 2019 and was announced as part of Budget 2020. I am satisfied that this has provided a sufficient lead in time to adapt to this new system before its implementation in 2023. Therefore there are no plans to postpone its introduction.

Matt Carthy (Cavan-Monaghan, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

115. To ask the Minister for Finance the status of a review into farm contractors regarding the carbon tax; if he intends to introduce any measures arising from such in Budget 2023; and if he will make a statement on the matter. [46661/22]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Finance Act 2012 introduced section 664A of the Taxes Consolidation Act 1997 which provides that a farmer may take an income tax or corporation tax deduction for farm diesel (including any carbon tax charged in respect of diesel) and then a further deduction for farm diesel which is equal to the difference between the carbon tax charged and the carbon tax that would have been charged had it been calculated at the rate of €41.30 per 1,000 litres of farm diesel (the 2012 baseline).

The measure was reviewed as part of the Tax Strategy Group and part of the Climate Action and Tax Paper which is available at: assets.gov.ie/231224/4d31b697-1bfb-4177-bb96-a744bbdfba99.pdf.

The relevant TSG paper concluded that:

"On the grounds of equity, the case for a continuation of section 664A for farmers is not a strong one. In a more benign set of circumstances for farm enterprises, a clear recommendation to remove section 664A, perhaps on a phased basis over a number of years, might be appropriate. The fact that the normal business deduction in respect of input costs would remain in place as well as the VAT refund scheme for business diesel expenditure should also be kept in mind.

However, the war in Ukraine has caused fuel prices to increase and has raised concerns domestically about food security and the supply of fodder. The Minister for Agriculture, Food and the Marine has tasked a National Fodder and Food Security Committee to prepare an industry response to the emerging crisis in feed, fodder, fertiliser and other inputs, and to develop contingency plans and advice to assist farmers in managing their farm enterprises. Against this background, the 2022/2023 autumn-winter period would not seem to be the appropriate time to make a change. It may be preferable to consider signalling a policy change in the current year but to defer action until a later date.

At the same time, a move to extend the scope of section 664A beyond the current cohort of beneficiaries might be seen to undermine the desired objective of putting in place a policy approach which is more aligned across different goals. If it is considered that farm contractors require support, this might best be addressed in the context of a longer-term policy for agriculture."

The position is that I have not made any change, either to extend or curtail the so called double deduction for farm diesel, in today's Budget.

Matt Carthy (Cavan-Monaghan, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

116. To ask the Minister for Finance the remaining increases in carbon tax that will apply to agricultural diesel in 2022 and 2023; if he has considered delaying or rescinding entirely such increases; and if he will make a statement on the matter. [46662/22]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

In line with the Programme for Government commitment on carbon tax policy, Finance Act 2020 legislates for annual increases in the rate of carbon tax out to 2030.Finance Act 2020 sets out the specific rate impacts and date of impact for each affected fuel and is available online :

Finance Act 2020 , Section 27 (irishstatutebook.ie).

As the Deputy will be aware, it is a long-standing practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.