112 Basis of assessment, persons chargeable and extent of charge

Summary

This section provides for the basis of assessment, in relation to income tax charged under Schedule E, and describes the persons chargeable and the extent of the charge to tax. Income tax under Schedule E is charged for each year of assessment on every person having or exercising an office or employment of profit mentioned in that Schedule, and in respect of every annuity, pension or stipend chargeable under that Schedule. The charge to tax covers all salaries, fees, wages, perquisites or profits whatever derived from the office, employment or pension for the year of assessment.

However, for 2018 and subsequent years, Schedule E is generally chargeable on the amount of emoluments that a person is paid in the year of assessment i.e. the receipts basis of assessment.

Emoluments paid (i) to certain company directors and (ii) in respect of which a PAYE exclusion order has issued, remain chargeable to tax on the earnings basis of assessment.

Details

(1) Income tax under Schedule E is charged on every person having or exercising an office or employment of profit referred to in that Schedule (see section 19) in respect of all salaries, fees, wages, perquisites and other profits derived by that person from the office or employment. It is also charged on any person to whom any annuity, pension or stipend chargeable under that Schedule is payable in respect of all salaries, fees, wages, perquisites and other profits derived by that person from the annuity, pension or stipend. The charge is computed on the total amount of all such payments for the year of assessment.

This subsection keeps the emoluments within the charge to Schedule E and, for 2018 and subsequent years, the emoluments will be charged to tax in the year they are received i.e. on the receipts basis.

(2)(a)&(b) Where emoluments (that is, anything assessable to income tax under Schedule E) derived from an office or employment would be for a year of assessment in which the person in receipt of the emoluments does not hold the office or employment, then —

• (i) if in the year of assessment the person has not yet held the office or employment, the emoluments are treated as emoluments for the first year of assessment in which the office or employment is held and are taxed accordingly, and
• (ii) if in the year in question the person no longer holds the office or employment, the emoluments are treated as emoluments for the last year of assessment in which the office or employment was held and are taxed accordingly.

(3) For 2018 and subsequent years, the income tax to be charged in respect of emoluments to which Chapter 4 Part 42 applies (emoluments chargeable to tax under the PAYE system of deduction) is on the amount paid to the person in the year of assessment i.e. the receipts basis of assessment.

The receipts basis of assessment will not apply to emoluments paid to proprietary directors or in respect of emoluments where an exclusion order is in place.

(4) Where emoluments fall chargeable to tax for the year 2017 (on the earnings basis of assessment) but also fall chargeable to tax in the year 2018 or a subsequent year (on the receipts basis of assessment), an individual can apply to Revenue to have the emoluments for the year 2017 charged to tax on the basis of the actual emoluments paid to the individual in 2017 (i.e. on the receipts basis of assessment).

(5) In the case of the death of an individual, any emoluments due to be paid to the deceased person will be deemed to have been made to him or her immediately prior to death.

(6)(i) The receipts basis of assessment does not apply to a proprietary director or

(6)(ii) in cases where an exclusion order is in place. The latter scenario includes for example, a payment of benefit made by the Department of Employment Affairs and Social Protection.

Relevant Date: Finance Act 2021