I assume the Deputy is referring to loyalty programmes operated by some airlines. Such programmes allow a participant to collect “points” through various means, including paying for flights, booking hotels or in some cases spending money on debit or credit cards. These points can be redeemed for goods and services with the airline or its commercial partners. In some cases, individuals, in addition to the points they earn from costs incurred in their private capacity, may, as employees, earn points from airline travel that has been paid for by their employer.
Section 118 of the Taxes Consolidation Act (TCA) 1997, which is the general charging provision for the taxation of benefits in kind (BIK), provides for a charge to income tax in respect of the provision by a body corporate of certain benefits in kind. The charge is limited to the amount of the expense incurred by the body corporate in providing the benefit less any amount which the employee makes good to the employer in respect of the benefit.
While the entitlements to loyalty points can arise on foot of travel expenditure incurred by the employer, an additional cost does not arise for the employer in relation to the provision of this benefit. Therefore, income tax, PRSI and USC need not be applied to the benefit arising to employees in such circumstances.
I am advised by Revenue, that it is not possible to estimate the amount of additional revenue that could arise from an amendment to the legislation providing that airline points be treated as a taxable BIK, as such data is not available.
