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You are here: HomeBlogNovember Newsletter
November Newsletter E-mail

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September/October Newsletter - Part 2
Welcome to Part 2 to of October's newsletter.
In part one we examined:
PRSI Classes - General
Revenue E-Briefs - September
PRSI / Welfare - recent updates & publications
In part two we examine
PRSI Classes Directors/Owners/Spouse/Family Members
Starters / Leavers P45 & P46
Also don't forget to check out the Welfare Section for seminars about Employment/Revenue & Welfare Schemes.
As always should you need any assistance please do not hesitate to contact us on 01-2101967.
Please note we are currently running a series of Payroll (training) Courses around the country based on the changes that have been implemented due to recent legislation changes. More training dates are available on the website (click here).
PRSI Class for Directors / Business Owners & related spouses/family
Care should be used in identifying the PRSI Class of a Proprietary Director (50% shareholder) / Business Owner and both their respective spouses and or family members.
Typically Class S has been/is used by Directors/Business owners and sometimes (to a lesser extent) for spouse of directors; however the PRSI Scope section (which is generally the deciding entity) have not issuing any rulings on the determination of a PRSI Class S since February 2011.
However in response to an inquiry we sent into SCOPE regarding Class S, the Scope Welfare Manager who responded, indicated that Class S should strictly just be used by those individuals who are self-employed and NOT by company directors. This is due to both company and also a director being separate legal entities. Although they do acknowledge that in practice this is not typically the case.
Where a spouse or family member is employed in a family COMPANY then they should be employed under PRSI class A. Where the spouse or family member is employed in a family BUSINESS (sole-trader/partnership entity) then PRSI can be allocated as Class M.
ROS / Notice to Employers for Cessation & Commencement of work
ROS has recently issued a new Notice to employers providing details with respect to starters and leavers.
Cessation
P45's (Part 1) should be issued to REVENUE "day the employee ceases to be employed immediately the employment ceases".
P45's (Parts 2,3&4) should be issued to EMPLOYEE's "on the date the employment ceases"
However it should be noted that ROS will NOT accept a pre-dated P45 file. ROS can only accept a file dated the actual date of transmission or else one with an earlier date.
In practice it is generally not be feasible to apply the above criteria where the termination date does not match or tie in with a payroll period date. Thus standard practice is to issue a P45 on the date of an employee’s date of cessation (where feasible) or else ensure that the P45 has been issued by the end of the following pay period.
Commencement
Where an employee commences employment an employer should request a copy of the employees most recent P45, and then submit Part 3 of said P45 to ROS. Where no P45 Part 3 is available, the employer should submit a P46. When the employer is aware of the employee not having worked previously, they should request the employee submit a Form 12A (application for tax credits).
An employer can register an employee with Revenue via ROS, using the online/offline upload of the P45 Part 3 file, or via Post with the hardcopy P45 Part 3 or via phone, (it should be noted that Revenue will only register 3 employees at a time via the phone). Tel: 1890 -222/333/444/777 - 425 ( http://www.revenue.ie/en/contact/lo-call.html )
It is worth noting that where an employee presents a P45 from a previous year, while still technically valid for the purpose PAYE employment and notification of Revenue via the P45 Part 3; we would recommend that the employer should NOT use the Tax Allowances /USC details on this P45 as the both the PAYE and USC systems and allowances have changed substantially over the last few years. (Circumstances differ depending on the relevant tax year in question). The employer should setup the employee under emergency tax while waiting on the tax details to be issued by ROS.
Also please note while Revenue maintain that they will always provide previous employment income and PAYE/USC paid details to the employer, this is not always the case. On occasion P45 will either have the incorrect details or possible no details at all. While there is no single action that can stop this issue from arising, one of the few options (however practical it may or may not be) is to review each P2C import file against the current P45, and cross check the relevant details against each other. Where there are discrepancies you should contact Revenue.
Revenue - E-Briefs & Updated Documents
E-Briefs are Revenues way of notifying and publishing change within the operation of Revenue. The E-Briefs that relate to payroll are:
Update to the USC FAQ Guide
http://www.revenue.ie/en/tax/usc/universal-social-charge-faqs.pdf
eBrief No. 49/2012: Extended deadline for ROS Customers in respect of RACs, PRSAs & AVCs
http://www.revenue.ie/en/practitioner/ebrief/2012/no-492012.html
eBrief No. 47/2012: Extended ROS Support Opening Hours for Pay & File 2012
http://www.revenue.ie/en/practitioner/ebrief/2012/no-472012.html
eBrief No. 46/2012: ROS Pay & File Deadline 15th November 2012
http://www.revenue.ie/en/practitioner/ebrief/2012/no-462012.html
Welfare/PRSI - Updates & Publications
Welfare & Revenue Seminars on Employment Grant Schemes
http://www.welfare.ie/EN/Press/PressReleases/2012/Pages/pr261012.aspx
If you have any questions about the above feel free to email me at david@payroll.ie. Alternatively you could attend one of our training courses. For details of the venues and dates please contact us on 01-2101967 or via email info@payroll.ie
Sincerely,
David Twomey
Payroll Matters Ltd
Tel:  01-2101967

 

In this, the last month to the run up to budget and tax year end, we have decided to review some good news and even present a few good ideas on schemes available from Revenue.

Content includes:

- Revenue's Guide to Employment Tax Incentives
- Welfares new employment Service
- End Of Year - BIK Review.

As always should you need any assistance please do not hesitate to contact us on 01-2101967.

Please note we will be hosting a series of Payroll Budget Briefings nationwide based on the changes that will be introduced in next week’s budget. Click here for more details.As always should you need any assistance please do not hesitate to contact us on 01-2101967.



Revenue
Tax Relief and possible tax refunds & savings. Employment Scheme (Revenue Guide - click here)

Revenue Job Assist

This relief is available for Employment of previously unemployed person who has been on the live register for more than 12 months. The employee is granted an increased tax incentive (€3810 Tax Cr.), while the employer is granted an increased cost based (twice the cost of employment) to be offset against Corporate Tax. Details for the employer (click here). Details for the employee (click here)

Employer Job Scheme

This relief is available for Employment of previously unemployed person who has been on the live register for more than 6 months. The employer is absolved from the cost of Employer PRSI for a period of 12 months. Details for Employer PRSI Scheme (click here)

Bike Scheme

This is a scheme to encourage employees to cycle into work. An employer can purchase a bike and safety equipment (up to €1000) once every five years. It works by allowing an employer to pay for the item in full, or reduce an Employee's (Gross) Pay by the value of the relevant deduction prior to the application of PAYE/PRSI and USC. Details for Bike Scheme (click here)

Travel Pass

This is a scheme to encourage the use of Public Transport (where it exists). The scheme can be used for a Bus Pass / Train Pass or a Ferry Pass. Issued by an appropriate company/authority.  It works by allowing an employer to pay for the item in full, or allowing the employer to Reduce an Employee's (Gross) Pay by the value of the relevant deduction prior to the application of PAYE/PRSI and USC. Details for Travel Pass (click here)

Small Benefits €250

This scheme allows an employer to award staff with vouchers or other non-monetary items up to a value of €250 per employee per tax year. The award must be given in a single transaction and cannot form part of any serious of transactions or a sub-part of a larger award. Details for the Small Benefits (click here)

Film Relief

Film Relief is available for individuals (employees) who make a "qualifying investment" into a "qualifying film". Whereby the value of the relief is provided in the form of additional Tax Credits and Standard Rate Cut Off Points. In essence this means where an employee invests (up to €50,000) they can claim 20% tax relief as opposed to paying tax at 41% (i.e. this can give rise to a 21% tax rebate). Details for the Film Relief (click here)

Seed Capital

Where a former PAYE-employee sets up and invests in a new business; they may be eligible for a refund of any PAYE tax they had previously paid over the previous 6 years. The value of the refund is determined by the value of the investment invested in the new business. Details for the SEED Capital Scheme (click here)

Employment Investment Incentive

This relief is similar to the SEED Capital Scheme; however it is geared towards existing businesses. Relief is given on future\current year earnings (as opposed to previous earning with SEED) Details for the EII Scheme (click here).

Welfare New employment scheme

The Department of Social Protection has launched a new Employment Service they call "Intreo". It is described as a single point of contact for all employment and income supports.

The range of services are provided at no cost to employers and include:

Employment support and advice on a National and European level, giving you access to skilled, job ready candidates. The Jobs Ireland employment service is an excellent support resource when your company is recruiting - both now and in the future.
JobBridge internships and work placement services.
Financial supports when creating new jobs, minimising the cash flow demands for your company. The Employer Job (PRSI) Incentive Scheme exempts employers from liability to pay their share of PRSI for certain employees. The scheme is open to employers who create new and additional jobs.
Workplace supports to assist employees with disabilities.
Advice and access to any employment initiatives of relevance to your company.

(As per www.welfare.ie)

Benefit In Kind - POST EOY Review

Benefit in Kind is often setup in January on the assumption of what happened last year will happen again this year. While this is often the case, there will come a time at some point when a change has occurred.

Typically this may be a change in employment, a change in the role of the employee, or a change in the type of BIK item. All of these changes happen over the course of the year and often enough just seem to be a natural part of life, but unfortunately it can also mean that full impact of the changes are not fully realised till to late.

So that said, now is time to review your BIK items to ensure that the correct values have been applied and to make the changes where necessary. Revenue will expect the Employer to be on top of all relevant changes and to ensure the correct balance is being charged and recorded for the purpose of BIK.

So with that in mind it may be worthwhile to consider the following:

CARS - check to ensure the mileage/kilometres that are assumed to be Business Mileage has been recorded accurately and thus ensuring there is no under/over payment of BIK. Also check to ensure the correct Original Market Value is being applied.

Medical Insurance - check to ensure you have recorded the actual value paid by the employers. Remember premiums often change during the year. Also the employer is required to Gross-up any Tax Relief at Source values (TRS typically 20%), and pay this value to Revenue via the company Corporate Tax (CT) returns. This total combined value (Value paid to the medical insurance provide and also the TRS Gross-up) is the basis for the BIK liability.

Other Items - all assists or payments made to or on behalf of an employee are liable for BIK. Check to ensure all values have been recorded accurately and provided for in the relevant BIK calculations.

Where there is an undercharge of BIK, the employer is bound by Revenue Regulation to discharge the full value of the BIK on behalf of the employee by way of "BIK Shortfall Loan". This loan in turn needs to be reimbursed by the employee to the employer by the 31st March in the following tax year in order to ensure that there are no further BIK liabilities.

If you have any questions about the above feel free to email me at david@payroll.ie. Alternatively you could attend one of our training courses. For details of the venues and dates please contact us on 01-2101967 or via email info@payroll.ie

Sincerely,

David Twomey, CTA, BA(BIM)

Payroll Matters Ltd

Tel:  01-2101967

 

Last Updated on Thursday, 06 December 2012 16:30
 

Payroll Matters Ltd,

Arena House, Arena Road,

Sandyford Business Park, Dublin 18

Tel: 01-2101967 / Email: info@payroll.ie

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