Revenue Tax Briefing

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Revenue Tax Briefing Issue 36, June 1999

Seafarer’s Allowance Update


Tax Briefing - Issue 32, contained summary features on many of the changes introduced by the 1998 Finance Act. The provisions dealing with seafarers were covered briefly in this article. The Minister for Finance made the Order bringing the new Section 472B Taxes Consolidation Act 1997 into operation on 17 February 1999 (SI 48/99). The following article gives more detailed information on the operation of this Section, including an amendment made to the Section in the 1999 Finance Act. An amendment made to the operation of the foreign earnings deduction is also covered in the article.

Seafarer’s Allowance and FED Amendment

Section 14 Finance Act 1998 contains two measures for the benefit of seafarers.

Firstly, it provides for a new deduction of ₤5,000 for certain seafarers in arriving at their taxable income (Section 14 (1) (b) FA 1998). The ₤5,000 allowance was subject to EU Commission approval and applies from the tax year 1998/99. The allowance is conditional on a seafarer being at sea for at least 169 days in a tax year.

Secondly, the section provides for the amendment of the foreign earnings deduction to allow the time spent by seafarers visiting a UK port in the course of an international voyage to count as time spent abroad for the purposes of that deduction (Section 14 (1) (c) FA 1998).

For seafarers entitled to claim the foreign earnings deduction, there will now be a choice. They can claim the new deduction or the foreign earnings deduction, but not both. This choice only arises for seafarers on voyages to destinations outside the UK as the foreign earnings deduction does not apply to periods of absence on direct visits to the UK.

Seafarers on direct voyages to UK routes will be entitled to the ₤5,000 deduction only.

The Deduction - Section 472B(4) Taxes Consolidation Act 1997

Where an individual makes a claim and satisfies Revenue that he/she is a qualifying individual and was absent from the State for at least 169 days in a tax year for the purposes of performing the duties of a qualifying employment, he/she will be entitled to a deduction of ₤5,000 against the income from the qualifying employment. The deduction cannot be set against other income of the individual or against the income of his or her spouse. The ₤5,000 is a deduction in arriving at taxable income. The relief is not standard rated and is available at the taxpayer.s marginal rate of tax.

  • Qualifying individual is defined as an individual who holds a qualifying employment and has an agreement (known as the articles of agreement.)with the master of a ship.
  • Qualifying employment means an employment the duties of which are performed on a sea-going ship on an international voyage. Employment is defined as an office or employment of profit, the emoluments of which are charged to tax under Schedules D or E. (In determining whether the duties of an employment were performed on a sea-going ship on an international voyage, any duties not so performed which were merely incidental, are regarded as having been performed on a sea-going ship on an international voyage.)
  • Sea-going ship means a passenger or cargo ship registered in an EC Member States’ Register. Fishing vessels are specifically excluded from the definition of a sea-going ship and, as a consequence, fishermen are excluded from the benefits of the new deduction.
  • Member States’ Register is defined in the Official Journal of the European Communities. The new allowance will be due only to employees on board ships entered in the European Communities. Member States. Registers.
  • International voyage means a voyage beginning or ending in a port outside the State. For year of assessment 1998/99, a rig or platform situated in maritime area outside the continental shelf is regarded as a port outside the State for the purposes of the section. For year of assessment 1999/00 a rig or platform situated in any maritime area is regarded as a port outside the State for the purposes of the section (Section 15 Finance Act 1999 refers). A voyage to such a rig would therefore qualify as an international voyage for the purposes of the new deduction. The original section applied the allowance to seafarers on vessels which serviced drilling rigs in foreign waters. The effect of the 1999 amendment is to extend the allowance to seafarers on vessels servicing drilling rigs in Irish waters.

In determining whether the individual has the necessary period of absence from the State, he/she is regarded as being absent from the State for a day if he or she is absent at midnight.

Exclusions Section 472B (3) and (5)

The new deduction is not available where the income from an employment:

  • Is subject to the remittance basis of assessment (Section 71 (3) Taxes Consolidation Act 1997)
  • Is subject to the split year treatment. (Section 822 Taxes Consolidation Act 1997) [Split year treatment applies where a taxpayer in the year of arrival in, or departure from, the State is deemed resident for part of the year only and is thus already entitled to favourable tax treatment.]
  • Arises to State employees or employees of State-sponsored bodies or statutory boards

If an individual has claimed the new seafarer.s deduction, a claim cannot be made in respect of:

Amendment of foreign earnings Deduction

To qualify for the foreign earnings deduction a taxpayer must be absent from the State for at least 90 days in a year in minimum periods of at least 14 days at a time. However, visits to the United Kingdom did not qualify for the purposes of the deduction. With effect from 6 April 1998, where, in a period of at least 14 days in which a qualifying individual is absent from the State for the purposes of performance of the duties of a qualifying employment, on a sea-going ship which visits a port in the UK and also visits a port outside the State and the UK, the time spent in the UK port will count for the purposes of the foreign earnings deduction. However, the visit to the UK port cannot be a direct visit from a port in the State. It must be part of a longer international voyage.

Qualifying individual, qualifying employment and sea-going ship have the same meaning as in Section 472B Taxes Consolidation Act 1997 i.e. the meanings as explained above.

The effect of the amendment is that seafarers who would qualify for the seafarers allowance can also include visits to a UK port for the purposes of the FED, provided such a visit was part of a longer international voyage.

Examples 1998/99

Example 1

Example 2

Income from qualifying seafaring employment (assessable spouse)



UK Dividends



Income from other employments



Rental Income



Income from employment (non assessable spouse)






Seafarers Allnce



Personal Allnce



PAYE Allowance








20,000(1)/14,100(2)@ 24%



2,600(1)@ 46%






Medical Insurance Relief 750(1)/700(2)@ 24%



UK Withholding Tax 500(1)@ 15%



Mortgage Interest 2,000(2)@ 24%





Tax Due



* Deduction only applies to income from qualifying employment