Revenue Tax Briefing Issue 39, March 2000
Each year Revenue issue Forms P11D - Return of non-cash Emoluments etc. to about 10,000 employers. The approach taken is to send the forms to employers who have not received the return in recent years. Employers who receive the forms must return details of their employees’/directors’ fringe benefits within the time limit mentioned on the form. The legislation at Section 897 TCA 1997 sets out the details which are required. It includes company cars, preferential loans, scholarship payments and payments in kind made to employees/directors. The scope is fairly wide ranging.
In practice, the Form P11D lists the relevant taxable benefits which must be returned. The notes to the form explain the nature of the various benefits and the amounts to be returned. In completing the form, if the employer has difficulty in determining the cost or other details of the benefit, then best estimates can be used provided this is clearly marked as such. Also, the employer’s accounting year ending in the tax year may be taken as the equivalent of the year to 5 April - except for cars and preferential loans, the details of which must be returned on the 5 April basis.
There are penalties for failure to make a return or the making of an incorrect return.
A cash award made to an employee in recognition of passing an examination, or acquiring a qualification, which bears some relationship to his/her duties, is regarded as not assessable, provided that the award is of such amount that can, reasonably, be regarded as a reimbursement of expenses likely to have been incurred in studying, and sitting for the examination.
Special increments of salary awarded on passing an examination etc. are chargeable, as part of the employee’s remuneration, in the normal way.
Where awards are made to directors or employees as testimonials to mark long service, such awards are normally taxable. Where, however, an award takes the form of tangible articles of reasonable cost, tax is not charged provided:
Where an employee moves within the employer organisation or takes up employment with a new employer then certain removal/relocation expenses can be paid free of tax. The terms, conditions and procedures are set out in Tax Briefing, Issue 31 (April 1998). Prior Revenue “approval” is not required in respect of the removal/relocation expenses covered by the article.
Awards made under a formal staff suggestion scheme to employees for suggestions which are outside the scope of the employee’s normal duties can be made free of tax provided a number of conditions are met - these are set out in Tax Briefing, Issue 32 (June 1998). The tax office must be advised in advance of the existence of the scheme and given confirmation that the conditions are met.