EBA Update 77 - Payment of CPD Allowance and Taxation

The employer representative, VHIA, advised its members (i.e. the employers) that the Continuing Professional Development (CPD) Allowance need not be taxed. Individual employers also issued notices concerning the payment of salary back pay, the CPD Allowance and EN Translation payments which included statements that the CPD Allowance would not to be taxed at the time of payment to an employee.

VHIA has subsequently received advice that the advice it provided to employers was incorrect.

VHIA is now advising that the CPD Allowance should be taxed by the employer at the time of payment to an employee. It would seem that the conflicting advice from VHIA is causing some considerable confusion to employers, and therefore ANF members.

Therefore, we now have the following scenarios:

1. ANF members have received the CPD Allowance without any tax being deducted by the employer at the time of payment.

If an employer has already paid the CPD Allowance without deducting tax they are not allowed to withhold any money in a subsequent period for taxation purposes without the written consent of the employee. However, if your CPD Allowance was not taxed, you may be required to provide evidence to the Tax Office of proper expenditure of the CPD Allowance on education at the end of this financial year.

2. ANF members receive the CPD Allowance with tax being deducted by the employer at the time of payment.

In the event that the CPD Allowance is taxed by an employer at the time of payment, there will not be any requirement for an employee to prove expenditure on education at tax time.

Members with further queries in relation to taxation matters are advised to consult your personal taxation adviser who will be able to clarify any liability an employee may have depending on the individual circumstances of each employee.