Pearse Doherty TD welcomes deferral of flat rate expenses grab
Sinn Féin Finance spokesperson Pearse Doherty TD has welcomed confirmation to him in a parliamentary reply that the proposal to end the flat rate expenses scheme for tens of thousands of workers has been deferred.
“I welcome this deferral which has been confirmed to me after a conflict between the Taoiseach’s comments and the Minister’s replies to me from last week.
"A deferral does not equal an abandonment of the idea. I am shocked at the lack of transparency around this area of tax policy with the Revenue Commissioners having the power to cut the take home pay of tens of thousands of workers with the stroke of a pen.
"I am concerned that the Minister’s reply states that: 'This approach will ensure that any changes that may be made to the flat rate expenses regime do not impact on any specific group earlier than the rest'.
"This means that a wider range of workers could face this cut in 2020. The cat is now out of the bag.
"I am glad Sinn Féin’s intervention and the work of Trade Unions has seen this proposal knocked back for now.
"As Fine Gael throw around promises of tax cuts for the higher end of the income range, lower paid workers must be defended against arbitrary unexplained moves.”
Dail Question No: 179
To ask the Minister for Finance further to Parliamentary Question Nos. 158, 164, 169, 170 and 171 of 13 November 2018, if the changes mentioned will be introduced by primary or secondary legislation or without legislation; and if he will make a statement on the matter.
- Pearse Doherty.
* For Written answer on 20/11/2018
Ref No: 48282/18
Minister for Finance (Paschal Donohoe):
Revenue have an on-going review of their concessionary flat rate expenses practice to ensure that the expenses granted remain justified & appropriate to modern day employments & work practices.
As a result, I am aware that the intention to update the practice was communicated to certain sectors and I have been advised by Revenue that the effective date for implementation of the changes referred to in the previous replies to parliamentary questions identified by the Deputy has been deferred to 1 January 2020. This approach will ensure that any changes that may be made to the flat rate expenses regime do not impact on any specific group earlier than the rest.
Revenue are independent in the administration of the tax code, but I understand that the flat rate expenses regime is an additional concessionary practice operated by Revenue where both 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 of the Taxes Consolidation Act (TCA) 1997 is satisfied.
It is important to be clear that there has been no change to the general rule set out in legislation that says that all employees are entitled to claim a deduction under section 114 TCA 1997 in respect of an expense incurred wholly, exclusively and necessarily in the performance of the duties of their employment, to the extent which the expenses are not reimbursed by the employer. This means that all employees remain entitled to claim deductions for valid and specific expenses incurred.
As a result, any change to a particular flat rate expense does not require a change to either primary or secondary legislation but results in an update to the relevant Tax and Duty Manual, which is available on the Revenue website.
The purpose of the regime is to simplify administration where the specific legislative criteria is met to help both the taxpayer and Revenue, by making it easier for large groups of employees working in the same sector to avail of their entitlement to tax relief in respect of expenses incurred in the performance of their employment duties.
Revenue have advised that any revisions to their administrative practice will only take place after engagement with the relevant representative body and won’t take effect before 1 January 2020.