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Do you want to reduce your company's tax bill and your employees tax bills |
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Written by Nilsson Denver
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Friday, 04 July 2008 22:00 |
Employers and Employees do not take advantage of tax breaks given to them to reduce them amount of tax and prsi they pay.
Here are several of the most obvious ways of saving tax.
1. Pay for the employee's travel pass. There is no tax and prsi to pay. So if the travel pass is Eur60 per month (720 per year) reduce their gross salary by 720 and pay their travel pass and both employee and employer are better off
Example:
Single person
Tax Credit 67.70
Tax cut off 653.85
| Gross | 27720 | 27000 | | tax | 2023 | 1880 | | Ee Prsi | 1399 | 1356 | | Net Pay | 24298 | 23764 | | Travel Pass | -720 | | | Left over pay | 23564 | 23764 |
Employee better off by Eur200
Employer saves Er prsi Eur77 i.e. 720 x 10.75%
2. Mileage allowances for travelling on company business
If an employee uses their own car to travel to and from locations on behalf the company
they can receive a mileage allowance. The following rates are allowed
Civil Service Rates
Rates that are not higher than the civil service rates
Get Civil Service Rates here
http://www.revenue.ie/index.htm?/leaflets/it51.htm
3. Subsistence allowance
If an employee spends most of their time away from the office they can receive an allowance for food and accommodation.
http://www.revenue.ie/leaflets/it54.pdf
You can get up to 16.95 if you are away from your office for more than 5 hours
http://www.isme.ie/services-page17394.html
4. Pensions
Employee's can make contributions to pension schemes and get tax relief
Employer's can make contributions on behalf of the employee with having o pay tax or prsi on those contributions.
Talk to a pension adviser about the fine details.
5. Gift Eur250
You can give your employee a once off gift of Eur250 tax free.
6. Exam Fees
If an employee is doing a course that is relevant to their work, you can pay for it and they pay no tax or prsi.
7. Professional Membership fees
If they require membership of an organisation e.g. Accountancy body and it is related to their job, their member fee can be paid for them tax free.
8. Do not pay NET WAGES. When a potential employee says they want to take home Eur400 per week, how much will that cost your company.
A married person's gross wages will be lower than a single person's gross wages.
A person with no tax credits will require a higher gross wage to get a net of Eur400.
You could end up as follows
Married Person Gross = 500
Single person Gross = 600
Single person Gross = 800
They all get the same net of 400 but the cost to a company varies greatly.
More info from the revenue commissioners on employee benefits at
http://www.revenue.ie/leaflets/it20a.pdf
Always talk to a good tax adviser before making any final decisions
You may need to notify the revenue commissioners about how you are doing things.
In most cases this is just a formality.
Article no.100005
copyright nilsson denver (2007)
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