New rules on real-time reporting run risk of failure, says Tax Institute president
The new president of the Irish Tax Institute has described Revenue’s Enhanced Reporting Requirements (ERR) regime as “counter-productive”.
The new rules require employers to report tax-free employee benefits in real-time, meaning on or before the time they are awarded to their staff.
Speaking at the institute’s annual general meeting yesterday, Aoife Lavan said there was no specific objection to the information that Revenue is seeking.
“But the stipulation that it will be reported in real time places a significant burden on employers,” she said. “And at a time when the cost of doing business is such a burning issue, it surely is counter-productive to push ahead with a regime that will increase compliance costs of small businesses.”
She said a fine of €4,000 for any mistake made in the real-time reporting was “harsh”, and that the full-time reporting could prompt employers to abandon the practice of recognising employees through small benefits and gifts.
Under the rules, an employer must determine in advance of making any payment or providing a benefit whether it is a taxable or non-taxable payment. If it is taxable the employer should make the necessary deduction under the PAYE system and report through payroll. If the benefit meets the conditions to qualify for the small benefit exemption, then the employer must report it to Revenue.
“As part of an employer’s existing governance processes when the employer is recording the items, they have determined are non-taxable and are processing them to provide to employees, they will now report the non-taxable small benefits to Revenue,” notes the Revenue Commissioners.
The Tax Institute has raised its concerns about the new rules at its preBudget meeting with the Finance Minister Jack Chambers.
“Let’s hope sense will prevail and that the minister will accede to the changes we have recommended to the proposed system,” said Ms Lavan.
She also told the AGM that she’s hopeful the Standard Fund Threshold for pensions will be raised in next month’s Budget. She said the Institute has made a strong case for raising the current
€2m cap, which has been unchanged for a decade.
“It’s easy to forget that it once stood at €5.4m before being reduced to €2.3m at the height of the financial crisis in December 2010,” said Ms Lavan.
“Four years later, it was further reduced to €2m. But hopes are high that the forthcoming Budget will bring in a more realistic threshold that takes account of inflation and salary growth over the past 10 years.”