Louise O'Reilly (Dublin Fingal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

116. To ask the Minister for Finance his views on the small benefit exemption; in particular the restriction by which only the first two benefits qualify for the exemption, regardless of their combined value falling beneath the threshold of €1,000; and if he will make a statement on the matter. [4608/24]

Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I propose to take Questions Nos. 116 and 126 together.

Under the “Small Benefit Exemption”, an employer may provide up to two small benefits which will be exempt from Income Tax, PRSI and USC, provided all of the conditions contained within section 112B of the Taxes Consolidation Act 1997 (TCA) are satisfied.

The main conditions for the exemption are as follows -

• the benefit provided must be in the form of a voucher or other non-cash item;
• where the benefit provided is in the form of a voucher, the voucher must only be for the purchase of goods or services and must not be capable of being exchanged in part or in full for cash;
• the aggregate value of the benefit(s) must not exceed €1,000 in a year of assessment; and
• the benefit must not form part of a salary sacrifice arrangement.

Where all of the conditions are not satisfied, the exemption does not apply and the benefit is subject to tax in the usual way, in accordance with section 112 TCA 1997.

Since 1 January 2024, where the Small Benefit Exemption applies an employer is required to return details of all qualifying incentives provided to their employees/directors on or before the benefit is provided.

Amendments were made to the Small Benefit Exemption in Finance Act 2022 to increase the number of permissible benefits from one to two and to increase the maximum amount of the benefit from €500 to €1,000. These changes were intended to allow employers greater scope and flexibility to grant tax-free non-cash rewards to their employees, for example in respect of exceptional performance, meeting targets, increased profits, etc.

The scheme continues to be kept under review by my officials but any changes to the scheme could create an additional cost which would need be recovered elsewhere.

Further information on the Small Benefit Exemption is available on Revenue’s website, at the following link: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-01-01e.pdf.