Tuesday, 2 December 2008
Dáil Eireann Debate
160. Deputy Joanna Tuffy asked the Minister for Finance if a person opts to avail of the bicycle tax break via a salary sacrifice arrangement will that person, in the same tax year, be prohibited from participating in the salary sacrifice scheme for employees who received tax saver commuter tickets; and if he will make a statement on the matter. [43525/08]
There is no prohibition on participating in both schemes in the same tax year. However, employers must be satisfied that the bicycle will be used for cycling to and from work or between workplaces. It should be noted that participation in both schemes is voluntary for employers.
The purpose of the scheme is to encourage more employees to cycle to and from work, to contribute to lowering carbon emissions, to help reduce traffic congestion, and to improve health and fitness levels.
The scheme allows an employer to provide an employee with a bicycle and cycle safety equipment as a benefit of their employment, without the employee being liable to benefit-in-kind taxation. The scheme applies where the bicycle will be used by the employee for travelling to and from work or for travelling between workplaces.
The scheme can be implemented through salary sacrifice arrangements in a similar manner to the existing Travel Pass Scheme. Under such an arrangement, the employer provides the bicycle and safety equipment to the employee who agrees to forego or sacrifice part of his or her salary every pay period in order to cover the cost of the bicycle and safety equipment. Any salary sacrifice arrangement must be completed within a maximum period of twelve months and the arrangement will be reflected in the employee’s pay over that period.
The bicycle and safety equipment are exempt from benefit-in-kind taxation up to a limit of €1,000. Thus the employee will not be liable to income tax, employee PRSI, or levies on the cost of the bicycle and safety equipment. The employer will also benefit in that employer PRSI is not payable on the cost of the bicycle and safety equipment.
Participation in the scheme is voluntary for employers. However, where an employer agrees to participate, he or she must make the scheme generally available, on an equal basis, to all employees requesting it.
There are no in-built restrictions in the scheme regarding where the bicycle and associated safety equipment can be purchased. This is a matter for employers as they will be purchasing the bicycles and safety equipment in all instances. The tax exempt benefit-in-kind will be limited to €1,000. Where the cost exceeds this amount, a BIK charge will apply to the balance. The bicycle and safety equipment may only be provided to an individual employee once in a five year period.
It is not envisaged, at this stage, that there will be a notification procedure for employers to indicate to the Revenue Commissioners that they are operating the scheme. However, the purchase of bicycles and associated safety equipment by employers for employees will be subject to the normal Revenue audit procedure with the normal obligations on employers to maintain records (e.g. invoices, salary sacrifice agreements between employer and employee, such agreements to include a statement from employees that the bicycle and safety equipment are for their own use and will be used for travelling to and from work).
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