The tax system has still not caught up with the changed work culture following the pandemic as some existing measures are too inflexible to be relevant to how people work today, Chartered Accountants Ireland warned.
Despite the huge increase in the number of people working from home for part or all of the normal week, tax authorities do not recognize an employee’s home as their normal place of work, except in exceptional circumstances.
That complicates what should be simple questions, including the cost of subsistence and travel expenses, the accounting body said.
Workers who now commute two or three days a week instead of five will no longer benefit from TaxSaver commuter fares, which aim to encourage greater use of public transport for environmental reasons, they said, calling for a more flexible ticketing regime to accommodate the new to live up to reality.
At the same time, income taxes remain high here for middle and higher earners, some of whom have a new opportunity to work from outside the jurisdiction or who may be hired here by employers to work from elsewhere, creating a new risk that the link between Ireland’s success in attracting foreign direct investment and collecting income taxes could be broken, the panel said.
The comment on remote working is included in a major position paper ahead of Accountants Ireland’s budget called ‘Next Financial Year’ and is based on the insights of its 30,000 members on both sides of the Irish border.
The paper contains over 100 individual recommendations, ranging from the need for greater clarity on environmental reporting standards, to income tax and bankruptcy, to the operation of government agencies such as the commercial register office.
The working paper advocates action to encourage uptake of the new small business rescue program, the Small Company Administrative Rescue Process (SCARP), ahead of an expected surge in potential bankruptcies.
The paper also advocates extending grants and support, historically targeted at the export and manufacturing sectors, more broadly to the domestic and traditional small business segments to support local economies and communities.
It suggests that the basis on which many grants and supports are offered should be adjusted, with value, not staff numbers, being the key performance indicator.
The Director of Public Policy at Chartered Accountants Ireland, Dr. Brian Keegan said the document seeks to lay out what is required for well-functioning economies and societies over the next year.
“Last year we realized that government is going to be bigger in the future and it needs to be done in ways that make business prosper. SMEs face increasing financial and administrative burdens in the coming months from necessary legal developments related to automatic registration, the right to apply for remote work and statutory sick pay.
“The timing of these and their impact on the business must be considered and balanced,” wrote Dr. Keegan.
https://www.independent.ie/business/irish/tax-and-allowance-rules-outdated-as-more-work-from-home-chartered-accountants-ireland-says-41813513.html Tax and allowance rules are outdated as more people work from home, says Chartered Accountants Ireland