Take bonus as Taxsaver bus ticket query

generalbison

I'm probably being a bit thick here, but want to clarify something before I commit to it.
My work allows me to take an upcoming bonus (dunno what amount it is yet) in the form of the annual taxsaver bus ticket if I so choose.

Cost of 537 on higher tax bracket
Cost of 773 on lower tax bracket

I'm close to the border of the tax bracket so not sure exactly how it'll work out. The bonus should cover either above fully anyway, and any left overs will be given to me in cash (and cut in half by tax etc.)
It all happens in 1 month's pay packet, the cost isn't spread out over the year.

Say it all goes in the higher tax bracket, and the bonus ends up as exactly 537, is there any affect whatsoever to my pay packet, PAYE+PRSI+USC speaking?

As i say I'm probably being dumb, but would appreciate the clarification

schemingbohemia

Probably better off asking this in taxation

http://www.boards.ie/vbulletin/forumdisplay.php?f=1208

From my memory of the legislation i would have thought it a bit dodgy for bonuses to be treated in this way - it's supposed to be regarded as a salary sacrifice.

LXFlyer

No it's perfectly allowable Scheming.

See here:
http://taxsaver.ie/Commuters/

Victor

The employer buys the ticket from Irish Rail (or whoever). In your case, do I have it right that the ticket costs about €1,120?

Let us say your normal gross salary is €33,000 per year (net €26,709). Your employer assesses a bonus of €2,000. This being paid as your ticket and €880 (€2,000-1120) via payroll. For tax purposes, you income will have been €33,880 (€33,000+880, net €27,132) - that is you bonus will be €423 in cash terms (plus the ticket).

In buying the ticket, the employer would save about €120 (€1,120 x 10.75%) in employers PRSI.

As your earnings won't be equal over each month, there may be some variation, but it will balance out over the year.

Tax calculator: http://www.deloitte.ie/tc/

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schemingbohemia, sacrificing his bonus is sacrificing part of his salary. Regardless, that rule is quite moot and seems to be designed to stop civil servants looking for full salary and their ticket.

schemingbohemia

Sorry for wrong steer there. Thanks lxflyer and victor for clarifying my mistake!

generalbison

Well its all gone through now. The bonus actually had to cover the full cost of the ticket (€1120) of course, not just the discounted price as I thought in the OP.
The bonus was in fact slightly short of that price, by less than €100.
So the difference there came out of my pay packet, but nothing major.

I'm slightly surprised that my PAYE, PRSI and USC amounts all dropped a small amount. I thought that they would remain the same compared to usual.
Would i be right in guessing that im not paying PAYE, PRSI and USC on the small deduction that was used to pay off the difference between bonus and ticket price? That's the only way I can make sense of it anyway.

Victor

generalbison wrote: »

Well its all gone through now. The bonus actually had to cover the full cost of the ticket (€1120) of course, not just the discounted price as I thought in the OP.

The problem there is your bonus is also calculated before tax.

I'm slightly surprised that my PAYE, PRSI and USC amounts all dropped a small amount. I thought that they would remain the same compared to usual.

Would i be right in guessing that im not paying PAYE, PRSI and USC on the small deduction that was used to pay off the difference between bonus and ticket price? That's the only way I can make sense of it anyway.

Correct.