How will the CIE tax saver ticket effect me?

Gumbo

guys,

im looking at getting a CIE tax saver ticket for my commute to work.
i have only recently started using the bus so thats why i havent used one before.

i currenlty spend €1.80 each way to work so €3.60 per day or €18.00 per week. i will only use the bus for commute not any other time i would reakon.

the ticket im looking at is the bus only valued at €980, now i know i get tax relief etc etc on it but just wonder how will it effect my fortnightly wages?

as in how much money will i be down etc
just trying to figure out if i will be better off on the tax saver scheme or just pay as i go.

thanks.

penexpers

Well 980 a year means 18 euro per week (or so), so about 36 euro per two weeks.

Depending on the rate you pay tax at you will get either 26% or 47% back (I think).

26% off means 36 euro would be taken out at source but you would get about 10 euro back per 2 weeks
47% off means 36 euro would be taken out at source but you would get about 17 euro back per 2 weeks

All figures approximate, but you get the idea.

MOH

I'm pretty sure you only effectively pay the tax-discounted amount - i.e. you don't pay first and claim it back after. Basically, it comes out of your gross rather than your net salary.

From www.taxsaver.ie:

Employee

You will save either 20% or 41% in Tax depending on the rate of tax you are paying.

You will save 6% in PRSI.

Example of TaxSaver Savings

* Mr. Smyth has a Salary of €45,000 per annum or €865.38 per week.
* He is paying tax @ 41% + 6% PRSI.
* His company purchases his annual rail & bus outer short hop ticket for €980.
* The price of his ticket is deducted weekly from his salary, that's €18.84 a week. This is deducted before he pays Tax or PRSI. Therefore not paying for his travel from his net income.
* He is taxed on his €865.38 - €18.84 = €846.54 (taxable income).
* Saving €460.60 on Tax and PRSI payments.
* The ticket is really costing him €519.40 of his own money and €460.60 from the tax man.

Example of TaxSaver Savings

* Mr. Jones has a Salary of €25,000 per annum or €480.76 per week.
* He is paying tax @ 20% + 6% PRSI.
* His company purchases his annual rail & bus outer short hop ticket for €980.
* The price of his ticket is deducted weekly from his salary, that's €18.84 a week. This is deducted before he pays Tax or PRSI. Therefore not paying for his travel from his net income.
* He is taxed on his €480.76 - €18.84 = €461.92 (taxable income).
* Saving €254.80 on Tax and PRSI payments.
* The ticket is really costing him €725.20 of his own money and €254.80 from the tax man.

So if you're paying 18 a week, that's 936 a year (although after holidays/ban hols/sick days etc it's probably closer to 850/year).

The annual ticket also covers you for (dublin bus only) airport buses and the Nitelink (which of course is about to be slashed, so not the bargain it once was).

Probably still worth your while overall though.

zagmund

Some employers (like mine) will only let you pay for an annual ticket in a single lump sum and not pay a portion per pay period, so watch out for that.

This would mean that one week you may get no money at all, but for the rest of the year you would get your normal amount. If you can budget around that then it's worth doing. If your employer allows you to take deductions out per pay period then you are even better off as you don't have that problem pay period with no cash.

Assume you are paid €1,000 per fortnight. The ticket costs €980 (tax free) so you are effectively only taxed on €20 that week. Let's say you pay €9 tax and PRSI, so you would effectively get paid €11 that week. On the plus side you won't be shelling out your bus fare every day for the next 12 months.

Things to remember - you can use it on nightlinks (if they still exist in a few months) so you save €5 per trip on that, and also when you are in town you can jump on a bus to get from one side of the city to another instead of walking as you might do now. This doesn't save money (since you probably would have walked) but it does make things easier.

z

penexpers

MOH wrote: »

I'm pretty sure you only effectively pay the tax-discounted amount - i.e. you don't pay first and claim it back after. Basically, it comes out of your gross rather than your net salary.

The full amount is taken off your gross pay, then the amount of tax paid is automagically reduced.

paulm17781

MOH wrote: »

The annual ticket also covers you for (dublin bus only) airport buses and the Nitelink (which of course is about to be slashed, so not the bargain it once was).

What's about to be slashed? Only Nitelink or Nitelink and Airport buses?

penexpers

paulm17781 wrote: »

What's about to be slashed? Only Nitelink or Nitelink and Airport buses?

Nitelink.

paulm17781

penexpers wrote: »

Nitelink.

Typical. I'm sure to raise profits they never considered having Nitelinks pick people up on the way back into town though. Another example of Dublin bus being totally out of touch with modern Dublin.

Gumbo

thanks for the advice guys, either way i have missed the boat!
my company does the tax saver scheme buit applications must be received by oct 31st for the following year.

they also take the full amount out of your salary before tax deductions and bill the employee forthnightly, so essentially i pay them back every two weeks.

i guess i ill have to apply for next year!

would i be right in assuming the following :

my employer buys the ticket at 980.00
i get taxed on my salary minus the 980.00
im on the 41% tax rate (for a small amount)
so then the total cost to me is 59% of 980.00 divided by 26 payslips?

do i really benefit from this as the 980 is taken from my salary in the first place???

paulm17781

You'll pay less tax every pay check. I think it's worth it. It halves the cost of Luas / Bus.

loyatemu

if the ticket costs 980 and you are paying tax at 41% then it is only costing you in real terms 578, or €11 a week - this is the amount your NET salary will reduce by. Definitely worth doing.

Gumbo

loyatemu wrote: »

if the ticket costs 980 and you are paying tax at 41% then it is only costing you in real terms 578, or €11 a week - this is the amount your NET salary will reduce by. Definitely worth doing.

execellent, thanks very much.

MOH

penexpers wrote: »

The full amount is taken off your gross pay, then the amount of tax paid is automagically reduced.

Yep. Whatever way I read your first post, I thought you were saying you had to claim it back later on, rather than it being automatic.

ixoy

loyatemu wrote: »

if the ticket costs 980 and you are paying tax at 41% then it is only costing you in real terms 578, or €11 a week - this is the amount your NET salary will reduce by. Definitely worth doing.

Exactly. Put it another way: If you don't do it, you'll have €578 more in your paycheck. You could then spend this on travel (let's say 48 weeks at work - 578/48 = 12e a week) which isn't enough for your needs.

Carawaystick

you could point out to your employer that they will save on the employers prsi @10.5% or so - i.e. a hundred euros from their pocket by not letting you get the ticket.