Brendan Griffin (Kerry, Fine Gael)
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267. To ask the Minister for Finance if an anomaly (details supplied) that is preventing self-employed sole trader professionals from claiming expenses for food and so on when out working will be examined; and if he will make a statement on the matter. [51210/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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For expenses to be deductible they must be wholly and exclusively laid out or expended for the purposes of the trade or profession. This is in accordance with section 81 of the Taxes Consolidation Act 1997, which sets out the general rules for deductions for the computation of profits or gains arising in respect of trades and professions. I am advised by Revenue that, as a general rule, subsistence expenses such as food are not deductible by sole traders for tax purposes.

Expenditure incurred on food in the course of a trade or profession will generally have a duality of purpose in that the person has the ordinary need to eat. Where expenditure is incurred on food because the taxpayer must eat away from home, that expenditure is not wholly and exclusively laid out or expended for the purposes of the trade or profession and therefore is not an allowable expense.

In the case of employees, in accordance with section 114 of the Taxes Consolidation Act 1997, where an employee is necessarily obliged to incur and defray out of the emoluments of the employment expenses of travelling in the performance of the duties of the employment, or otherwise to expend money wholly, exclusively and necessarily in the performance of those duties, the expenses may be deducted from the emoluments of the employee to be assessed to income tax.

Arising from an employee’s entitlement to a tax deduction under section 114, in respect of certain expenses, there exists a long-standing Revenue practice under which employers may reimburse tax-free to employees the expenses of travel (and subsistence relating to that travel), subject to certain conditions being fulfilled. I am advised by Revenue that the conditions under which the reimbursement to employees of the expenses of travel and subsistence may generally be made without deduction of tax are as follows:

(a) firstly, the employee must be temporarily away from his/her normal place of work in the performance of the duties of his/her employment;

(b) secondly, the travel and subsistence expenses must be necessarily incurred in the performance of the duties of the office or employment, and

(c) thirdly, arising from a long-accepted position, supported by tax case law, the expenses of subsistence must attach to travelling necessarily incurred in the performance of the duties of the office or employment.

Moreover, provided the employee bears the cost of all expensesof travel necessarily incurred in the performance of the duties of his/her employment (and bears the cost of subsistence relating to such travel), Revenue will disregard for income tax purposes the reimbursement of expenses of travel and subsistence, where such reimbursement is made by way of:

(a) a flat rate up to, but not exceeding, the prevailing Civil Service rates for travel and subsistence, or

(b) a flat rate based on any other schedule of rates and related conditions of travel and subsistence, which do no more than reimburse the employee for actual expenditure necessarily incurred.