Revenue has updated its Enhanced Reporting Requirements (ERR) guidance for advance travel and subsistence payments for employers to allow an optional administrative practice.
An advance payment of travel and subsistence to an employee or director is a perquisite and income tax, USC and PRSI must be deducted. These types of payments would therefore not typically fall within the scope of ERR as the payment does not relate to travel or subsistence incurred by the director or employee. However, when a claim for the related travel and subsistence is made to the employer, and the employer wishes to avail of the Section 114 administrative practice (i.e. not to tax the travel and subsistence expense), a payroll adjustment must occur to give the effect of no tax applying to the expense amount incurred and at that point the payment becomes a reportable benefit for ERR.
Revenue recognises that this may give rise to certain practical issues for employers in terms of their obligations with ERR requirements so an optional administrative practice can apply.
So now an advance travel and subsistence payment may be treated, in certain circumstances, as not being subject to tax via payroll when paid, but instead treated as a payment where no tax is deducted in respect of travel and subsistence and therefore subject to ERR reporting at the time of payment. Then when the expense is incurred and the claim submitted by the employee/director, the employer will be required to update their ERR submission to Revenue to reflect the actual travel and subsistence expense amount in respect of that employee/director.