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Finance Act 2004

Amendment of Chapter 4 (collection and recovery of income tax on certain emoluments (PAYE system)) of Part 42 of Principal Act.

9.—(1) Chapter 4 of Part 42 of the Principal Act is amended—

(a) in section 985A (inserted by the Finance Act 2003 )—

(i) in subsection (1)—

(I) by substituting “Subject to subsection (1A), this section applies” for “This section applies”, and

(II) by deleting “excluding perquisites or profits whatever in the form of shares (including stock) in a company, but” in paragraph (a),

(ii) by inserting the following after subsection (1)—

“(1A) Subsection (1) shall not apply to emoluments in the form of perquisites or profits whatever received by an employee in the form of shares (including stock) being shares or stock in—

(a) the company in which the employee holds his or her office or employment, or

(b) a company which has control (within the meaning of section 432) of that company.”,

(iii) by inserting the following after subsection (4)—

“(4A) Any amount of tax which an employer remits in accordance with subsection (4) and any regulations made under that subsection in respect of a notional payment shall be treated as an amount of tax which, at the time the notional payment is made, is deducted in respect of the employee's liability to income tax.”,

and

(iv) by inserting the following after subsection (6):

“(7) Every regulation made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.”,

(b) by inserting the following after section 985A—

“PAYE settlement agreements.

985B.—(1) In this section ‘qualifying emoluments’ means emoluments, other than emoluments in the form of a payment of money, which are—

(a) minor, as regards the amount or type of emolument involved, and

(b) irregular, as to the frequency in which or the times at which, the emoluments are provided.

(2) Subject to this section, the Revenue Commissioners may, on application in that behalf from an employer, enter into an agreement with the employer under which the employer shall account to them in accordance with the provisions of this section in respect of income tax in respect of qualifying emoluments for a year of assessment of one or more employees of the employer which the employer would otherwise have to account for in accordance with the other provisions of this Chapter and any regulations made under those provisions.

(3) Where an employer accounts for income tax under an agreement made in accordance with this section—

(a) the employer shall not be liable to account for that tax under the other provisions of this Chapter and any regulations made under those provisions,

(b) qualifying emoluments covered by the agreement shall not be reckoned in computing, for the purposes of the Income Tax Acts, the total income of the employee concerned,

(c) the amount accounted for shall not be treated as having been deducted in accordance with the other provisions of this Chapter and any regulations under those provisions,

(d) an employee shall not be treated as having paid any part of the income tax accounted for by his or her employer and, accordingly, the employee shall not be entitled to a credit in respect of, or to claim or receive repayment of, any part of that tax, and

(e) emoluments covered by the agreement shall not be included in a return by the employer under Regulation 31 of the Income Tax (Employments) (Consolidated) Regulations 2001 ( S.I. No. 559 of 2001 ).

(4) The amount in respect of income tax to be accounted for by an employer under an agreement entered into under this section shall be specified in the agreement and shall be—

(a) determined in accordance with the factors specified in subsection (5)(a), and

(b) comprised of the amounts specified in subsection (5)(b).

(5) (a) The factors specified for the purposes of subsection (4)(a) are—

(i) the aggregate amount of the qualifying emoluments covered by the agreement on which income tax is chargeable,

(ii) the total number of employees in receipt of qualifying emoluments covered by the agreement,

(iii) the number of those employees respectively chargeable to income tax—

(I) only at the standard rate for the year of assessment to which the agreement relates, and

(II) at both the standard rate and the higher rate for that year,

and

(iv) such other matters as are agreed by the Revenue Commissioners and the employer to be relevant in relation to the qualifying emoluments covered by the agreement.

(b) The amounts specified for the purposes of subsection (4)(b) are—

(i) an amount equal to income tax on the aggregate of the amounts computed in accordance with paragraph (a)(i), calculated so as to take account of the factor specified in paragraph (a)(iii), and

(ii) a further amount reflecting the income tax on the benefit to the employees of receiving the qualifying emoluments included in the agreement without liability to tax.

(6) Where an employer wishes to avail of this section for a year of assessment, the employer shall make application in writing in that behalf to the Revenue Commissioners which is received by them on or before 31 December in that year.

(7) If the amount of income tax which an employer is to account for in relation to a year of assessment in accordance with an agreement entered into under this section is not paid to the Collector-General within 46 days of the end of that year, the agreement shall be null and void and, accordingly, this Chapter and any regulations made thereunder shall apply as if this section had not been enacted.

(8) Any act to be performed or function to be discharged by the Revenue Commissioners which is authorised by this section may be performed or discharged by any of their officers acting under their authority.”,

(c) in section 994, by substituting the following for subsection (1):

“(1) In this section ‘employer's liability for the period of 12 months’ means the aggregate of—

(a) all sums which an employer was liable under this Chapter and any regulations under this Chapter to deduct from emoluments to which this Chapter applies paid by the employer, and

(b) all sums that were not so deducted but which an employer was liable, in accordance with section 985A and any regulations under that section, to remit to the Collector-General in respect of notional payments made by the employer,

during the period of 12 months referred to in subsection (2), reduced by any amounts which the employer was liable under this Chapter and any regulations under this Chapter to repay during the same period, and subject to the addition of interest payable under section 991.”,

and

(d) in section 995 by substituting the following for paragraph (a)(i):

“(i) which, apart from Regulation 29 of the Income Tax (Employments) (Consolidated) Regulations 2001 ( S.I. No. 559 of 2001 ), would otherwise have been an amount due at the relevant date in respect of—

(I) sums which an employer is liable under this Chapter and any regulations under this Chapter (other than Regulation 29 of those Regulations) to deduct from emoluments, to which this Chapter applies, paid by the employer, and

(II) sums that were not so deducted but which the employer was liable, in accordance with section 985A and any regulations under that section, to remit to the Collector-General in respect of notional payments made by the employer,

during the period of 12 months next before the relevant date,”.

(2)  (a) Subject to paragraph (b), subsection (1) has effect as on and from the passing of this Act.

(b) Subsection (1) (a) (iii) applies as respects the year of assessment 2004 and subsequent years of assessment.