996 Treatment for tax purposes of certain unpaid remuneration

Summary

This section provides that remuneration, which is deductible as an expense in the computation of the profits or income of a trade or profession for a particular accounting period or period of account but which remains unpaid at the end of the period, is deemed to have been paid at a particular date in relation to that period. The PAYE provisions apply to the payment as if it has been paid at that particular date.

Details

Definitions

(1) “accounting period” is the period of 12 months ending on the date up to which the accounts are usually made up or such period not exceeding 12 months as the Revenue Commissioners may determine.

“date of cessation” is the date on which a person ceases to hold the office or employment.

“date of commencement” is the date on which a person starts to hold the office or employment.

“period of account” is, apart from an accounting period, the period for which the accounts of the trade or profession are made up.

“period of accrual” for remuneration paid for an office or employment in a trade or profession is the period starting on the later of the 1st day of the accounting period or period of account or the date of starting in the office or employment and ending on the earlier of the last day of the accounting period or period of account or the date of ceasing in the office or employment.

“relevant date” is —

• in relation to an accounting period, the last day of that period,
• in relation to a period of account which is less than 12 months, the last day of that period, and
• in relation to a period of account which is more than 12 months, each 31st day of December within that period and the last day of that period.

“remuneration” includes all payments of whatever type from an office or employment.

Tax treatment of unpaid remuneration

(2) Remuneration which is allowed as an expense in the computation of the profits or income of a trade or profession but which remains unpaid at a relevant date is deemed to be emoluments to which the PAYE system applies and to have been paid in accordance with subsection (3), and all the provisions relating to PAYE apply to that remuneration as if it had been so paid.

(3) The unpaid remuneration is deemed to accrue on a day to day basis throughout the period of accrual and there is deemed to have been paid on each relevant date the total remuneration which has accrued up to that date or, if earlier, the date of cessation of the office or employment from the beginning of the period or, if later, the date of commencement of the office or employment.

Exceptions

(4) The provisions of the section do not apply to unpaid remuneration which is paid before the end of 6 months from the relevant date or within 18 months from the 1st day of the period of account where that period exceeds 12 months.

Relevant Date: Finance Act 2019