How does the Taxsaver program work?

ProudDUB

Could someone give me a quickie crash course on how the Tax Saver scheme work. I am trying to help a relative out with the cost of their weekly commute, from Castleknock to town. The official website seems to presume that people already know how the system works. I am pretty clueless about it, other than seeing others here mention it from time to time.

So how does it work? Do you buy an annual ticket and your employer reimburses you? Or does your employer buy it and it is taken out of your wages? Do you have to buy a yearly ticket to participate in it, or can you buy monthly ones? Can you buy bus only tickets, or train only ones?

I know that your company has to be signed up for it, it is not something that a person can do by themselves. What are the advantages and disadvantages of the company doing that? If they aren't currently a part of it, what should she tell them to convince them to sign up for it.

Once signed up for it, what savings can she expect to make and what benefit of a financial nature, will her company get?

Thanks.

Riskymove

ProudDUB wrote: »

So how does it work? Do you buy an annual ticket and your employer reimburses you? Or does your employer buy it and it is taken out of your wages? Do you have to buy a yearly ticket to participate in it, or can you buy monthly ones? Can you buy bus only tickets, or train only ones?

In my experience you buy an annual ticket via your company

lets say its €1000

this €1000 is taken from your wages before tax etc

so you don't pay tax, PRSI etc on this €1,000

obviously the more tax you pay the more you save but if tax is 40% then you are saving 400

Riskymove

sorry you asked other things too

luas, Train and Bus tickets are all available

also combinations - e.g. annual bus and rail Commute within Greater Dublin area

Outside Dublin the tickets tend to be point to point



I think the benefit for companies is related to a cost they can write off or perhaps the amount of employers PRSI they pay.....not sure

LXFlyer

ProudDUB wrote: »

Could someone give me a quickie crash course on how the Tax Saver scheme work. I am trying to help a relative out with the cost of their weekly commute, from Castleknock to town. The official website seems to presume that people already know how the system works. I am pretty clueless about it, other than seeing others here mention it from time to time.

So how does it work? Do you buy an annual ticket and your employer reimburses you? Or does your employer buy it and it is taken out of your wages? Do you have to buy a yearly ticket to participate in it, or can you buy monthly ones? Can you buy bus only tickets, or train only ones?

I know that your company has to be signed up for it, it is not something that a person can do by themselves. What are the advantages and disadvantages of the company doing that? If they aren't currently a part of it, what should she tell them to convince them to sign up for it.

Once signed up for it, what savings can she expect to make and what benefit of a financial nature, will her company get?

Thanks.

The Taxsaver website sets this out quite clearly:

http://taxsaver.ie/Commuters/How-to-get-started/

How to get started

• You will have to get the company you work with to purchase a taxsaver
  Monthly, Annual or Part Yearly (Bus Éreann only) ticket on your behalf.
• Seek approval from your company to purchase a taxsaver ticket.
• Please note orders must be processed by the taxsaver administrator in your
  company, orders are not accepted by individual staff members.
• Check to see if your company is participating in the taxsaver scheme.
• If your company is not registered to order tickets then the company will
  have to complete the registration process.
• You will need to acquire the relevant ID
• Monthly, Annual and Part Yearly (Bus Éreann only) tickets can be purchased
  from the 1st of any month.
• Please note that ticket ordering deadlines apply, so tickets can be issued
  and delivered before the start of each month.
• Some companies offer Monthly Only or Annual Only options, this is at the
  discretion of the company.
• Some companies offer Annual tickets at a designated time during the year, ie
  January to December.

The company will save on Employer's PRSI on the cost of the ticket.

Employees will save tax, PRSI and USC on the cost of the ticket.

You can buy Bus only, Rail Only, LUAS only and combinations of all three. Tickets must be monthly or annual.

All of this is very clearly listed on the website - Click on the Commuter tab and then ticket types on the lefthand column.

Cushie Butterfield

Riskymove wrote: »

In my experience you buy an annual ticket

Individuals can't buy the annual ticket & later avail of the tax break. yOur company's taxsaver admin officer has to buy the ticket on your behalf.

Riskymove

Cushie Butterfield wrote: »

Individuals can't buy the annual ticket & later avail of the tax break. yOur company's taxsaver admin officer has to buy the ticket on your behalf.

sorry I did not mean that

I mena tthat you buy it through the company and wages deducted

thanks for pointing out that

ProudDUB

Thanks all. Very helpful.

So she decides if she wants a monthly or an annual ticket, the company buys it for her and the lump sum is taken out of her pay check for that month, is that correct? If the ticket costs 1000, that amount is taken out of her pay check and over the course of the year, she gets the 400 back in less tax being taken out of her pay check each week? Or does she get it back in the same pay check that the transaction in taking place in? Or does she only pay the 600 up front, as the other 400 is deemed to be her tax free saving?

The only perk to the company is that they pay less PRSI for the employee as their taxable income has gone down by the cost of the ticket, right?

LXFlyer

ProudDUB wrote: »

Thanks all. Very helpful.

So she decides if she wants a monthly or an annual ticket, the company buys it for her and the lump sum is taken out of her pay check for that month, is that correct? If the ticket costs 1000, that amount is taken out of her pay check and over the course of the year, she gets the 400 back in less tax being taken out of her pay check each week? Or does she get it back in the same pay check that the transaction in taking place on? Or does she only pay the 600, as the other 400 is deemed to be her tax free saving? (Sorry to be so anal about it all, its just that she is moving into a new house on Jan 1st. Having to come up with 1000, at the same times as the deposit and rent for the house would be a very big ask for her)

The only perk to the company is that they pay less PRSI for the employee as their taxable income has gone down by the cost of the ticket, right?

It's up to each company how they administer it in terms of timing, but most reduce the gross pay by the cost of an annual ticket spread over the course of the year, and thus your tax, PRSI, and USC is reduced over the year accordingly. A monthly ticket will obviously go in one month.

Macy0161

For an annual ticket, say if she is paid monthly, the cost of the ticket is divided by 12, and that amount is deducted from her wages each month. However, it's deducted from her gross salary, so she doesn't pay tax or prsi on this amount. So for a top rate tax payer, her wages would only be down approximately half of the deduction for that month. There's no tax back as such, the cost of the ticket isn't liable for tax and prsi.

Riskymove

Macy0161 wrote: »

For an annual ticket, say if she is paid monthly, the cost of the ticket is divided by 12, and that amount is deducted from her wages each month. However, it's deducted from her gross salary, so she doesn't pay tax or prsi on this amount. So for a top rate tax payer, her wages would only be down approximately half of the deduction for that month. There's no tax back as such, the cost of the ticket isn't liable for tax and prsi.

just think of as being paid less.....your annual wage is reduced by the cost of the ticket

ProudDUB

Deadly to know that the employer spreads this all out over the year. Thanks again lads & lassies.

Macy0161

ProudDUB wrote: »

Deadly to know that the employer spreads this all out over the year. Thanks again lads & lassies.

I don't think that's guaranteed, but I'm not aware of anywhere doing it different.

Riskymove

Macy0161 wrote: »

I don't think that's guaranteed, but I'm not aware of anywhere doing it different.

I think the company actually buys the ticket upfront at full price..it is the deductions from your wages to recoup the cost which are spread out

markpb

Macy0161 wrote: »

I don't think that's guaranteed, but I'm not aware of anywhere doing it different.

There are companies out there who won't split it or will only split it over a few months.

the groutch

some companies might take it out of your Xmas bonus (if you get one), some will do it month by month, some will give the option of which.
up to the individual company afaik