Friday, November 27, 2009
Flat Rate (employment) Expenses
These are expenses that are incurred in the performance of the duties of the employment and are directly related to the 'nature of the employee's employment'. A standard flat rate expenses allowance (deduction) is set for various classes of employee. For example, airline cabin crews are granted flat rate expenses of €64 per annum. The amount of the deduction is agreed between Revenue and representatives of groups or classes of employees (usually the employees are represented by trade union officials). The agreed deduction is then applied to all employees of the class or group in question.
Cycle to Work Scheme
From 1 January 2009, the provision of bicycles and associated safety equipment by employers to employees and directors who use the bicycles wholly or mainly for travelling to and from work or between work places will be treated as a tax-exempt benefit in-kind.
This tax exemption may only apply once in every 5-year period in respect of any one employee/director. The provision of bicycles/safety equipment must be generally available to all employees and directors. There will be a limit of €1,000 on the amount of expenditure an employer can incur in respect of any one employee/director. The scheme may also be implemented via salary sacrifice arrangements, whereby an employee agrees to forego part of her or her salary to cover the costs associated with the purchase of the bicycle and associated safety equipment. Where such salary sacrifice arrangements are implemented they must be completed over a maximum period of 12 months and the maximum amount that can be forgone is €1,000.
This tax exemption may only apply once in every 5-year period in respect of any one employee/director. The provision of bicycles/safety equipment must be generally available to all employees and directors. There will be a limit of €1,000 on the amount of expenditure an employer can incur in respect of any one employee/director. The scheme may also be implemented via salary sacrifice arrangements, whereby an employee agrees to forego part of her or her salary to cover the costs associated with the purchase of the bicycle and associated safety equipment. Where such salary sacrifice arrangements are implemented they must be completed over a maximum period of 12 months and the maximum amount that can be forgone is €1,000.
Childcare Services Relief
Childcare Services relief is a scheme of tax relief for income arising from the provision of certain childcare services. When the gross annual income from the provision of childcare service does not exceed €15,000 in 2007, 2008 or 2009 the income is exempt from tax. The childcare service must be provided in the carer’s home, not the children’s home and no more than 3 children may be cared for at any time.
Taxation of Married People
If you get married, both you and your spouse continue to be treated as single people for tax purposes in that year. If, however, the tax you pay as two single people is greater than the tax that would be payable if you were taxed as a married couple, you can claim the difference. (In other words, you can claim a tax refund). Refunds are only due from the date of marriage and will be calculated after the following 31 December. So for example, if you were married in 2008, any tax refund due to you will be calculated after 31 December 2008. If you get married in 2009, any tax refund due to you will be calculated after 31 December 2009.
Refunds are normally only due where a couple are taxed at different rates and one spouse could benefit from the unused standard rate cut-off point or for some of the unused tax credits of the other spouse.
When you get married therefore, it is important to advise the tax office of the date of your marriage. You will also need to quote your own and your spouse's Personal Public Service (PPS) Number.
For the years following your marriage, there are three options for taxation of married people. All of the options and the outcomes of choosing them are outlined below. The three options are:
-Assessment as a single person (i.e. you are both still taxed as single people)
-Separate assessment
-Joint assessment/aggregation.
Refunds are normally only due where a couple are taxed at different rates and one spouse could benefit from the unused standard rate cut-off point or for some of the unused tax credits of the other spouse.
When you get married therefore, it is important to advise the tax office of the date of your marriage. You will also need to quote your own and your spouse's Personal Public Service (PPS) Number.
For the years following your marriage, there are three options for taxation of married people. All of the options and the outcomes of choosing them are outlined below. The three options are:
-Assessment as a single person (i.e. you are both still taxed as single people)
-Separate assessment
-Joint assessment/aggregation.
Tax relief for disabled drivers and disabled passengers
The Disabled Drivers and Disabled Passengers Scheme provides a range of tax reliefs linked to the purchase and use of vehicles by disabled drivers and disabled passengers in Ireland. Under the terms of the scheme, you can claim remission or repayment of vehicle registration tax (VRT), repayment of value-added tax (VAT) on the purchase of a vehicle and repayment of VAT on the cost of adapting a vehicle, up to a maximum of 9,525 euro for a disabled driver and 15,875 euro for a disabled passenger.
Relief is limited to a vehicle that has been specially constructed or adapted for use by a disabled person and that has an engine size of less than 2,000cc in the case of the driver and 4,000cc in the case of the passenger.
If you qualify for tax relief under the scheme, you can also claim repayment of excise duty on fuel used in your vehicle for the transport of a disabled person, up to a maximum of 600 gallons per year. In addition, if you qualify under the scheme, your vehicle may be exempt from the payment of annual road tax on application to a Motor Tax Office.
Relief is limited to a vehicle that has been specially constructed or adapted for use by a disabled person and that has an engine size of less than 2,000cc in the case of the driver and 4,000cc in the case of the passenger.
If you qualify for tax relief under the scheme, you can also claim repayment of excise duty on fuel used in your vehicle for the transport of a disabled person, up to a maximum of 600 gallons per year. In addition, if you qualify under the scheme, your vehicle may be exempt from the payment of annual road tax on application to a Motor Tax Office.
Unfair Dismissal
A dismissal is considered to be automatically unfair if the employee is dismissed for any of the following reasons:
-Membership or proposed membership of a trade union or engaging in trade union activities, whether within permitted times during work or outside of working hours
-Religious or political opinions
-Legal proceedings against an employer where an employee is a party or a witness
-Race, colour, sexual orientation, age or membership of the Traveller community
-Pregnancy, giving birth or breastfeeding or any matters connected with pregnancy or birth
-Availing of rights under legislation to maternity leave, adoptive leave, carer's leave, parental or force majeure leave
-Unfair selection for redundancy
Under the unfair dismissals legislation, redundancy is considered to be a fair ground for dismissal. However although a redundancy situation exists, you may have grounds for complaint if the manner of your selection for redundancy was unfair. You may qualify to bring a claim for unfair dismissal if you consider that you were unfairly selected for redundancy or consider that a genuine redundancy situation did not exist – see ‘How to apply’ below. Unless your employer can prove there was a genuine redundancy situation and that fair procedures were followed, your dismissal may be found to be unfair. If you make a claim for unfair dismissal, you cannot also claim redundancy.
-Membership or proposed membership of a trade union or engaging in trade union activities, whether within permitted times during work or outside of working hours
-Religious or political opinions
-Legal proceedings against an employer where an employee is a party or a witness
-Race, colour, sexual orientation, age or membership of the Traveller community
-Pregnancy, giving birth or breastfeeding or any matters connected with pregnancy or birth
-Availing of rights under legislation to maternity leave, adoptive leave, carer's leave, parental or force majeure leave
-Unfair selection for redundancy
Under the unfair dismissals legislation, redundancy is considered to be a fair ground for dismissal. However although a redundancy situation exists, you may have grounds for complaint if the manner of your selection for redundancy was unfair. You may qualify to bring a claim for unfair dismissal if you consider that you were unfairly selected for redundancy or consider that a genuine redundancy situation did not exist – see ‘How to apply’ below. Unless your employer can prove there was a genuine redundancy situation and that fair procedures were followed, your dismissal may be found to be unfair. If you make a claim for unfair dismissal, you cannot also claim redundancy.
Short-time working and Jobseeker's Benefit
Example: My working week was reduced to 3 days a while ago and I get Jobseeker’s Benefit (JB) for the days that I don’t work. I have been informed that the JB payment is due to end shortly. Can I re-qualify for this payment after working a 3-day week for the next 13 weeks? What are my options?
This refers to the general rule whereby someone who has used up their entitlement to Jobseeker's Benefit may re-qualify by working and paying the appropriate PRSI contributions for at least 13 weeks.
However, in order to qualify for Jobseeker’s Benefit you need to have suffered a “substantial loss of employment”. When you originally went on a reduced working week you would have satisfied this condition. However, if your employment pattern has not changed during the course of your JB claim you are now classified as a part-time worker for the purposes of assessing any new claim. As a result, the 3 days that you don’t work will no longer be regarded as substantial loss of employment, and you will not re-qualify for Jobseeker’s Benefit after 13 weeks of part-time work.
Depending on your earnings and your family circumstances, you may be able to apply for Jobseeker’s Allowance for the 3 days that you don’t work. Alternatively, you may qualify for Family Income Supplement (FIS) which is a payment from the Department of Social and Family Affairs to help people at work on low incomes to support their families.
This refers to the general rule whereby someone who has used up their entitlement to Jobseeker's Benefit may re-qualify by working and paying the appropriate PRSI contributions for at least 13 weeks.
However, in order to qualify for Jobseeker’s Benefit you need to have suffered a “substantial loss of employment”. When you originally went on a reduced working week you would have satisfied this condition. However, if your employment pattern has not changed during the course of your JB claim you are now classified as a part-time worker for the purposes of assessing any new claim. As a result, the 3 days that you don’t work will no longer be regarded as substantial loss of employment, and you will not re-qualify for Jobseeker’s Benefit after 13 weeks of part-time work.
Depending on your earnings and your family circumstances, you may be able to apply for Jobseeker’s Allowance for the 3 days that you don’t work. Alternatively, you may qualify for Family Income Supplement (FIS) which is a payment from the Department of Social and Family Affairs to help people at work on low incomes to support their families.
What are Credited Contributions?
If you are an employee, Pay Related Social Insurance (PRSI) deductions are made from your earnings each week. Your PRSI contributions to the Social Insurance Fund can help you to qualify for social insurance payments, such as Jobseeker's Benefit and State Pension (Contributory).
A credited social insurance contribution is a contribution given to you without a PRSI payment. Some social welfare payments, including pension payments, allow you to combine your paid and credited contributions to help you qualify for a social insurance payment.
To qualify for a credit you must have worked and paid at least one PRSI contribution at PRSI Class A, B, C, D, E, or H and have paid or credited contributions in either of the last two completed tax years. For example, if you are applying for credits in 2009 you must have paid or credited contributions in either 2008 or 2007. If there is a gap of more than two completed tax years you must work and pay contributions for a further 26 weeks before you qualify for credited contributions.
A credited social insurance contribution is a contribution given to you without a PRSI payment. Some social welfare payments, including pension payments, allow you to combine your paid and credited contributions to help you qualify for a social insurance payment.
To qualify for a credit you must have worked and paid at least one PRSI contribution at PRSI Class A, B, C, D, E, or H and have paid or credited contributions in either of the last two completed tax years. For example, if you are applying for credits in 2009 you must have paid or credited contributions in either 2008 or 2007. If there is a gap of more than two completed tax years you must work and pay contributions for a further 26 weeks before you qualify for credited contributions.
Redundancy & Work Permits
If you are working on a work permit and lose your job through redundancy you should notify the Department of Enterprise, Trade and Employment and return your work permit. From 28 August 2009 there are new provisions for newly redundant people who were working on a work permit.
If you have been made redundant after working on a work permit for 5 consecutive years you no longer need a permit to work in Ireland. You should apply to your local immigration officer who will issue you with a stamp 4 immigration permission for one year. This permission may be renewed annually and it allows you to take up any employment but not self-employment. (Within the Dublin District immigration officers are based in the Garda National Immigration Bureau (GNIB), and outside Dublin in the local Garda District Headquarters.)
If you have held a work permit for less than 5 years, The Department of Enterprise, Trade and Employment will allow you a period of 6 months to find another job. When you find another job you have to apply for a new work permit. A labour market needs test is not required. If you were made redundant from a job on the list of ineligible categories you may apply for a new work permit for a job on that ineligible list.
You should contact your local immigration officer to confirm your immigration status. If you have more than 6 months before your immigration permission expires, you can reside in Ireland under your stamp 1 permission for a further 6 months. If you have less than 6 months' immigration permission you can have your immigration permission extended to 6 months which means you will have to pay €150 for a new GNIB card. If you have not found a new job after 6 months you will be expected to leave Ireland. If you then get an offer of employment in Ireland you may apply for a new work permit.
If you have been made redundant after working on a work permit for 5 consecutive years you no longer need a permit to work in Ireland. You should apply to your local immigration officer who will issue you with a stamp 4 immigration permission for one year. This permission may be renewed annually and it allows you to take up any employment but not self-employment. (Within the Dublin District immigration officers are based in the Garda National Immigration Bureau (GNIB), and outside Dublin in the local Garda District Headquarters.)
If you have held a work permit for less than 5 years, The Department of Enterprise, Trade and Employment will allow you a period of 6 months to find another job. When you find another job you have to apply for a new work permit. A labour market needs test is not required. If you were made redundant from a job on the list of ineligible categories you may apply for a new work permit for a job on that ineligible list.
You should contact your local immigration officer to confirm your immigration status. If you have more than 6 months before your immigration permission expires, you can reside in Ireland under your stamp 1 permission for a further 6 months. If you have less than 6 months' immigration permission you can have your immigration permission extended to 6 months which means you will have to pay €150 for a new GNIB card. If you have not found a new job after 6 months you will be expected to leave Ireland. If you then get an offer of employment in Ireland you may apply for a new work permit.
Contract of Employment
Anyone who works for an employer in Ireland for a regular wage or salary automatically has a contract of employment, regardless of whether it is written or not. The majority of employees work under open-ended contracts of employment. In other words, the contract continues until such time as the employer or employee ends it. Many other employees however, work under fixed-term or specified-purpose contracts which are contracts which end on a specified date or when a specific task is completed.
The contract of employment will include some or all of the following elements (regardless of whether the employer and employee have specified them or not):
-The terms that the courts say are in every contract of employment. Examples include the duty of every employer to provide a safe workplace and the duty of every employee to carry out the job to the best of his/her ability. This part of the contract is occasionally referred to as "common law".
-Terms that must be part of the contract as a result of laws passed by the Dail. Examples include the right to take maternity leave. Such terms are part of the contract even if the employer and employee do not specifically include them and replace any agreement between the employer and employee not to apply the particular law. So, the statutory right to take maternity leave overrides any agreement between the employer and employee that the employee will not take maternity leave.
-Terms that the Irish Constitution states must be in every contract, for example, the right of an employee to join a trade union.
-Collective agreements
-Joint Labour Committee Regulations
-EU laws
In addition, custom and practice in a particular workplace may form part of a contract. An example would be a particular level of overtime pay for employees.
The contract of employment will include some or all of the following elements (regardless of whether the employer and employee have specified them or not):
-The terms that the courts say are in every contract of employment. Examples include the duty of every employer to provide a safe workplace and the duty of every employee to carry out the job to the best of his/her ability. This part of the contract is occasionally referred to as "common law".
-Terms that must be part of the contract as a result of laws passed by the Dail. Examples include the right to take maternity leave. Such terms are part of the contract even if the employer and employee do not specifically include them and replace any agreement between the employer and employee not to apply the particular law. So, the statutory right to take maternity leave overrides any agreement between the employer and employee that the employee will not take maternity leave.
-Terms that the Irish Constitution states must be in every contract, for example, the right of an employee to join a trade union.
-Collective agreements
-Joint Labour Committee Regulations
-EU laws
In addition, custom and practice in a particular workplace may form part of a contract. An example would be a particular level of overtime pay for employees.
Thursday, November 12, 2009
Income Levy Certificates
The Supplementary Budget of April 2009 brought in changes to the income levy with effect from 1 May 2009. As a result the Income Levy Certificate 2009 has been revised.
Employers are to give a breakdown of income levy details for the periods
-1 January 2009 to 30 April 2009, and
-1 May 2009 to 31 December 2009
Where a payment is made to an ex-employee that is not included on the form P45 an income levy certificate should be issued to reflect this payment. This supplementary income levy certificate can either show the details of the supplementary payment only and be marked 'Supplementary' or it can include the details from the P45 plus the supplementary payment and be marked 'Amended'.
Some payroll software systems will print a version of the certificate automatically from the payroll record. Alternatively employers can use the Revenue template found Here A paper version of this income levy certificate is available from: Revenue's Forms & Leaflets Service Telephone (24-Hour service) 1890 30 67 06
Employers are to give a breakdown of income levy details for the periods
-1 January 2009 to 30 April 2009, and
-1 May 2009 to 31 December 2009
Where a payment is made to an ex-employee that is not included on the form P45 an income levy certificate should be issued to reflect this payment. This supplementary income levy certificate can either show the details of the supplementary payment only and be marked 'Supplementary' or it can include the details from the P45 plus the supplementary payment and be marked 'Amended'.
Some payroll software systems will print a version of the certificate automatically from the payroll record. Alternatively employers can use the Revenue template found Here A paper version of this income levy certificate is available from: Revenue's Forms & Leaflets Service Telephone (24-Hour service) 1890 30 67 06
Last Chance to Claim for Tax Year 2005
A quick reminder for those yet to register for PAYE Anytime, time is now running out to claim allowances and/or expenses for tax year 2005.
Why Register:
-View your tax record
-Claim a wide range of tax credits: service charges, union subscriptions and Rent Credit etc.
-Apply for refunds of tax including health expenses
-Update your address
-Declare additional income
-Request a review of tax liability for previous years
-Re-allocate credits between yourself and your spouse
-Track your correspondence submitted to Revenue
-Immediate update of your tax credits
-Speedy repayments
Why Register:
-View your tax record
-Claim a wide range of tax credits: service charges, union subscriptions and Rent Credit etc.
-Apply for refunds of tax including health expenses
-Update your address
-Declare additional income
-Request a review of tax liability for previous years
-Re-allocate credits between yourself and your spouse
-Track your correspondence submitted to Revenue
-Immediate update of your tax credits
-Speedy repayments
Motor Expenses & Subsistence Rate Changes
Motor and Subsistence Rates where reduced by approximately 25% in March of this year. It is vital to ensure all employee expenses that have been reimbursed since this period, have been based on the new rates.
Where an employee receives a value in excess of the actual expense, the general practice of Revenue, is to find the employee liable for PAYE, PRSI and Income Levy on the FULL VALUE of the reimbursement, not just the difference. Thus the employee would either need to return the value of the over payment or else have the full value of the expenses received declared as a form of income.
Where an employee receives a value in excess of the actual expense, the general practice of Revenue, is to find the employee liable for PAYE, PRSI and Income Levy on the FULL VALUE of the reimbursement, not just the difference. Thus the employee would either need to return the value of the over payment or else have the full value of the expenses received declared as a form of income.
New Health Insurance Tax Credits
A new age-related tax credit in respect of health insurance premiums paid for insured persons aged 50 years or over, has been introduced. The amount of the credit depends on the age of the insured person detailed as follows;
· aged 50 years and over but less than 60 years on the date the contract is renewed or entered into, the tax credit is E200;
· aged 60 years and over but less than 70 years on the date the contract is renewed or entered into, the tax credit is E500;
· aged 70 years and over but less than 80 years on the date the contract is renewed or entered into, the tax credit is E950; and
· aged 80 years and over on the date the contract is renewed or entered into, the tax credit is E1,175.
The Health Insurance (Miscellaneous Provisions) Act 2009 also amended the way in which the standard-rated tax credit for health insurance premiums is to be calculated. The standard-rated tax credit will be calculated net of any age-related tax credit due.
· aged 50 years and over but less than 60 years on the date the contract is renewed or entered into, the tax credit is E200;
· aged 60 years and over but less than 70 years on the date the contract is renewed or entered into, the tax credit is E500;
· aged 70 years and over but less than 80 years on the date the contract is renewed or entered into, the tax credit is E950; and
· aged 80 years and over on the date the contract is renewed or entered into, the tax credit is E1,175.
The Health Insurance (Miscellaneous Provisions) Act 2009 also amended the way in which the standard-rated tax credit for health insurance premiums is to be calculated. The standard-rated tax credit will be calculated net of any age-related tax credit due.
Tuesday, November 3, 2009
Taxing the Rich?
Taxing the Rich? Why should the well off pay?
After reading the union's new 10 point plan for recovery coupled with the debate on Pat Kenny's the "Frontline" last night, you have to wonder do the unions actually have a clue! It was clear for all to see last night Mr Jack O'Connor, President of ICTU and head of the country's largest union SIPTU can not distinguish between the pay bill and pay cuts, as Pat Kenny attempted on numerous occasions to clarify. Also, the notion of a higher 3rd tax rate for the well off does not make sense. Below are three examples of the average total tax take for 2009 for three different employees. (Based on a single employee and standard allowances)
A single person earning €30,000 per annum will pay €4,774 in tax, prsi & income levy.
A single person earning €100,000 per annum will pay €37,996 in tax, prsi & income levy.
A single person earning €250,000 per annum will pay €111,835 in tax, prsi & income levy.
Top earners by far pay a much higher percentage of gross pay to the tax man as it stands. What possible positive affect could a 54% tax rate have at this moment in time? While some items listed on their 10 point plan make sense, there is nothing new here, no thought has gone into budgeting their plans, hence the whole exercise is pointless.
Budget 2010 will be tough and should make for an interesting 9th December. We will be reporting further on the budget as we get it. Please share our blog on facebook, twitter etc by clicking the share button below, or click the "Follow our Updates" button on the bottom of this page, you will then receive an email every time our blog is updated.
After reading the union's new 10 point plan for recovery coupled with the debate on Pat Kenny's the "Frontline" last night, you have to wonder do the unions actually have a clue! It was clear for all to see last night Mr Jack O'Connor, President of ICTU and head of the country's largest union SIPTU can not distinguish between the pay bill and pay cuts, as Pat Kenny attempted on numerous occasions to clarify. Also, the notion of a higher 3rd tax rate for the well off does not make sense. Below are three examples of the average total tax take for 2009 for three different employees. (Based on a single employee and standard allowances)
A single person earning €30,000 per annum will pay €4,774 in tax, prsi & income levy.
A single person earning €100,000 per annum will pay €37,996 in tax, prsi & income levy.
A single person earning €250,000 per annum will pay €111,835 in tax, prsi & income levy.
Top earners by far pay a much higher percentage of gross pay to the tax man as it stands. What possible positive affect could a 54% tax rate have at this moment in time? While some items listed on their 10 point plan make sense, there is nothing new here, no thought has gone into budgeting their plans, hence the whole exercise is pointless.
Budget 2010 will be tough and should make for an interesting 9th December. We will be reporting further on the budget as we get it. Please share our blog on facebook, twitter etc by clicking the share button below, or click the "Follow our Updates" button on the bottom of this page, you will then receive an email every time our blog is updated.
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