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Tax deduction for employment expenses

Revenue published guidance on the tax deductibility of general expenses incurred in the performance of the duties of employment and flat rate expenses operated administratively by Revenue.  The treatment by Revenue of payment of the cost of Continuous Professional Development (CPD) and professional membership fees is also included in the guidance.

General deductions

The principals established from case law on expenses incurred “wholly, exclusively and necessarily” in the performance of duties of employment are set out in the guidance.  Revenue’s interpretation as set out in the guidance on the strict application of the test per section 114 TCA 1997 and the persuasion of case law may be helpful when determining the tax treatment of employment expenses. 

Relevant case law and Revenue eBriefs to section 114 TCA 1997 are contained in TaxSource which is available free to members. 

Flat rate expenses

The guidance also covers the Revenue’s administration of flat rate expenses. The flat rate expenses list and how to claim these expenses are included in the guidance. As a reminder, there is no change to the flat rate expense regime in 2020. Any planned change by Revenue is deferred until the Tax Strategy Group (TSG) carry out their review of tax policy and legislative options in relation to several aspects around the entitlement to tax relief for expenses incurred in employment. Read our bulletin on the deferral of changes to the flat rate expenses regime we published in December. 

Continuous Professional Development (CPD) and membership fees

According to the guidance, generally, a distinction is made between expenditure incurred in the performance of duties of employment which is deductible, and expenditure incurred to put the taxpayer in a position to perform the duties which is not deductible. The guidance states that Revenue are prepared to accept that in certain circumstances payment or refund for CPD costs comes within the scope of the published practice for course of exam fees as detailed in Tax and Duty Manual 05-01-09.

The guidance also refers to the tax treatment of professional membership fees. Tax and Duty Manual 05-02-18, which was updated this month, provides more details and examples on the treatment of such fees. Read our bulletin on the updated guidance from Revenue published in Tax eNews on 6 January 2020.

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