Jul 2013
27
EMPLOYERS DID YOU KNOW YOU CAN PROVIDE YOUR EMPLOYEES WITH A SMALL BENEFIT TAX FREE?
Revenue Commissioner’s Approved Small Benefit Exemption Scheme:
Employers can provide employees with a small benefit (that is a benefit not exceeding €250); this small benefit is not subject to PAYE, USC or PRSI.
The following rules apply:
The small benefit is traditionally given as a voucher, as mentioned above only one such benefit can be given to an employee in one tax year. If for example an employee receives a €150 voucher in January and a €100 voucher in June only the €150 January voucher will qualify for exemption and the €100 voucher given in June will be subject to PAYE, USC & PRSI.
Where a benefit exceeds the value of €250 the full value is subject to PAYE, USC & PRSI. For example if a €260 voucher is given to an employee the full value should be included on payroll as a benefit in kind and therefore subjected to PAYE, USC & PRSI.
Any changes to the scheme will be included in the help file within Thesaurus Payroll Manager and also on the online BrightPay help file http://www.brightpay.ie/docs/2013/benefit-in-kind/one-off-benefits/
Bright Contracts – Employment contracts and handbooks
BrightPay – Payroll Software
Jul 2013
7
Up to now the classification for PRSI purposes, of directors of limited companies who work in that company (“proprietary directors”), has been determined on a case by case basis. This determination takes into consideration the Code of Practice for Determining the Employment or Self-employment Status of Individuals. (http://www.welfare.ie/en/Pages/Code-of-Practice-for-determining-Employment-or-Self-Employme.aspx )
Under the provisions of Section 16 of the Social Welfare and Pensions (Miscellaneous Provisions) Act 2013 proprietary directors who own or control 50% or more of the shareholding of the company, either directly or indirectly, cannot be an employee of that company. This provision comes into effect from 1 July 2013.
In these circumstances the individual is classified as self-employed and is liable to pay PRSI at Class S.
The classification of proprietary directors who own or control less than 50% of the shareholding of the company will continue to be determined on a case by case basis, taking into consideration the Code of Practice for Determining the Employment or Self-employment Status of Individuals.
The new provision will apply to proprietary directors both prospectively and retrospectively.
Where these provisions are to be applied retrospectively, a person has the option of electing to have the decision, in relation to his or her employment prior to the enactment of the legislation, made under the Code of Practice for Determining the Employment or Self-employment Status of Individuals. Any decision will only apply to the period of employment prior to the enactment of the legislation.
Bright Contracts – Employment contracts and handbooks
BrightPay – Payroll Software
Jul 2013
4
Mothers and pregnant women face losses of up to nearly €3,000 a year as part of the tax on maternity benefit which came into force on July 1st.
Women’s representatives said the measure was a mean-spirited move by the Government.
The tax will contribute €15m to the exchequer in 2013, and €40m per full year from then on.
But the National Women’s Council yesterday expressed concern that many women were not aware when the reductions in benefit would take affect.
Its policy advisor Ann Irwin explained: “It’s a very mean-spirited move in a lot of ways. Even the commission on taxation has said that maternity benefit should remain outside the tax net. It’s there for mothers to nurture children when outside the workforce.
“The benefit payments are an important acknowledgment for mothers of the cost of having a baby in Ireland.”
Opposition parties have branded the new tax measure as “anti-family” and it could see working mothers pay up to €2,700. Mothers will pay different rates depending on their top-up payments from their employer as well as assessments on their means.
The tax could see benefits reduced by up to €103 a week, the council said.
The Department of Social Protection paid out €309m in maternity benefit payments in 2011.
Mothers get between €217.80 and €260 a week in payments for 26 weeks.
The council said women who got employer top-up payments would be worst affected but that it remained unknown how many would be affected by the levy.
But ministers have insisted women overall will not be worse off. Some had been receiving high payments while on maternity leave, ministers have also said.
However, Ms Irwin said many women remained in the dark about the tax. “The first they may know about it while on leave is when their next pay package comes in.”
Bright Contracts – Employment Contracts and Handbooks
BrightPay – Payroll Software
Jun 2013
1
From 1st July 2013 Maternity Benefit, Adoptive Benefit & Health & Safety Benefit payable by the Department of Social Protection will be taxable in full. These payments will be taxable but will not be subject to USC or PRSI.
The Revenue Commissioners have confirmed that employees in receipt of Maternity Benefit, Adoptive Benefit or Health & Safety Benefit will have their tax credit and standard rate cut-off point reduced to reflect the benefit they have received. As the benefit will be taxed by Revenue and not at source the recipients will continue to receive the same payment from the Department of Social Protection.
Employers will be advised of the adjusted tax credits and standard rate cut-off points on the tax credit certificates (P2C’s). As the benefit will be taxed by reducing the employee’s tax credits and standard rate cut-off point, employers are NOT to include figures for the benefit on Revenue forms i.e. P45, P60 or P35L.
Bright Contracts – Employment contracts and handbooks.
BrightPay – Payroll Software
Dec 2012
19
We have included a video to help you with submitting your P35 using Revenue Online Service.
This video can be accessed by clicking on the video icon in the ROS P35 screen in the software.
You can also view the video here.
