Benefit and Leaving

JaMarcusHustle · 24-03-2015 3:55pm #1

Hi all,

Quick question I was hoping for some advice on.

As part of my current job, my employer purchased an annual Leap card for Luas/Dublin Bus to the value of €1,550. It was effective from 1st Feb 15 to 31st Jan 16 and my salary/monthly net pay wasn’t affected at all.

I am leaving the company on 15th May, so there will be 8.5 months remaining on the card. I have been advised that I will owe that 8.5 months back to the company (€1,550 / 12 * 8.5 = €1,097.92) and that it will be deducted from my final paycheck.

This is understandable, and part of my contract so no problem here.

So two questions:

(i) When an employer has this as a benefit, do they pay €1,550 up front and that’s it, they see none of it back (assuming the employee stays), or do they claim some of this back in tax? If so, how much?

The reason I ask is that I’m not sure if I am liable for 72% of the €1,550 or 72% of the cost to them after they’ve claimed back their tax?

i.e. if they were able to claim back say €750, then that means they’re only out of pocket by €800, and this is the amount that should be pro-rata’ed. Just plucked that €750 figure out of thin air as an example btw. Not sure if I’m explaining this correctly or not!

Thanks for any advice.

Stheno · 24-03-2015 3:57pm

They don't have to pay employers prsi but that could be factored into the price they pay.

They don't save on anything else you do by not paying any tax prsi or usc

So at mist they saved 150 over 12 months but potentially can't claim it after you leave so 50 for the three months you were there is what they saved

JaMarcusHustle · 24-03-2015 3:59pm

Stheno wrote: »

They don't have to pay employers peso but that could be factored into the price they pay.

They don't save on anything else you do by not paying any tax peso or usc

Not being rude and appreciate the response, but could you rephrase that? I'm not sure what you mean.

Stheno · 24-03-2015 4:01pm

I edited my post above

gaz wac · 24-03-2015 4:01pm

why don't you just return the card to your company when you leave? They will get a refund for the June 15 to Jan 16....you pay for the full month of May !?!?

you wont owe them 8.5 months as they will get a refund

mushypeas12 · 24-03-2015 4:30pm

I am an Accountant. Your employer will be able to claim back approx. 47 percent of the cost of the Leapcard (providing you have standard tax credits). The situation is complicated further however as the company is permitted under tax law to offset the said expense against any tax liability (assuming they are making a profit and have no losses carried forward).
You, as the employee will be taxed on the benefit in kind on the unreimbursed amount (€1,097.92 x 3.5/8.5). By the way, are the company registered for VAT?

Stheno · 24-03-2015 4:35pm

mushypeas12 wrote: »

I am an Accountant. Your employer will be able to claim back approx. 47 percent of the cost of the Leapcard (providing you have standard tax credits). The situation is complicated further however as the company is permitted under tax law to offset the said expense against any tax liability (assuming they are making a profit and have no losses carried forward).
You, as the employee will be taxed on the benefit in kind on the unreimbursed amount (€1,097.92 x 3.5/8.5). By the way, are the company registered for VAT?

Hhow does that work? Anytime I had a taxsaver the monthly cost was deducted from my gross salary prior to my taxes being calculated

My understanding is that the main saving to the employer is employer prsi

Is your premise based on the employee not paying anything?

Geniass · 24-03-2015 4:38pm

Stheno wrote: »

Hhow does that work? Anytime I had a taxsaver the monthly cost was deducted from my gross salary prior to my taxes being calculated

My understanding is that the main saving to the employer is employer prsi

Is your premise based on the employee not paying anything?

The company gets the benefit of not paying ER PRSI by the amount your Gross Pay is reduced by the cost of the Leap card.

If you didn't get taxed the company didn't get the benefit either.

Stheno · 24-03-2015 4:41pm

Geniass wrote: »

The company gets the benefit of not paying ER PRSI by the amount your Gross Pay is reduced by the cost of the Leap card.

If you didn't get taxed the company didn't get the benefit either.

That's only ten and a bit per cent of the amount not 47 as was posted?

JaMarcusHustle · 24-03-2015 4:52pm

I know the usual tax saver scheme works like this, at least from an employee perspective:

Say I had a gross salary of 100k (sadly this is not true) and the ticket is 1500. For tax purposes, I am now taxed on a salary of (100k – 1.5k = 98.5k). My take home pay has dropped from €4,992 to €4,931 which means over the course of the 12 months, I am paying ((€4,992 - €4,931) * 12) = €730 for the ticket. My employer would pay the rest (€1500 - €730) = €770.

However this is not my situation (as an aside, what do the employer then get from this – do the claim back PRSI on the €770 or the €1500?) or is the above wrong?

My situation is different.

Again, assuming I’m on 100k (and again, sadly I’m still not), I now have a the travel card but it’s not reflected on my salary at all. I’m still getting €100k gross, and still getting €4,992 net each month.

Stheno · 24-03-2015 4:53pm

JaMarcusHustle wrote: »

I know the usual tax saver scheme works like this, at least from an employee perspective:

However this is not my situation (as an aside, what do the employer then get from this – do the claim back PRSI on the €770 or the €1500?)

My situation is different.

Again, assuming I’m on 100k (and again, sadly I’m still not), I now have a the travel card but it’s not reflected on my salary at all. I’m still getting €100k gross, and still getting €4,992 net each month.

Is it part of your normal benefits or part of a bonus? How did you come to get it?

Geniass · 24-03-2015 5:03pm

Stheno wrote: »

That's only ten and a bit per cent of the amount not 47 as was posted?

I think the 47% saving relates to the employee. I know they said employer in their post.

Stheno · 24-03-2015 5:04pm

Geniass wrote: »

I think the 47% saving relates to the employee. I know they said employer in their post.

That makes sense if it is the employee

Geniass · 24-03-2015 5:06pm

JaMarcusHustle wrote: »

I now have a the travel card but it’s not reflected on my salary at all.

It looks like the payroll department have not set up the payroll properly. Therefore you're not getting taxed, and the company is not getting the 10.75% ER tax deduction.

JaMarcusHustle · 24-03-2015 5:12pm

Stheno wrote: »

Is it part of your normal benefits or part of a bonus? How did you come to get it?

Normal benefits.

Once you reach a certain level, you choose between an annual parking space, an annual leap card fully paid for by the company or an annual cash payment of around 1000 (which is before tax).

Stheno · 24-03-2015 5:29pm

JaMarcusHustle wrote: »

Normal benefits.

Once you reach a certain level, you choose between an annual parking space, an annual leap card fully paid for by the company or an annual cash payment of around 1000 (which is before tax).

Ah that makes sense as to why you've paid no tax, if you check on the taxsaver website it's called benefit in addition to salary where essentially you have gotten the leap card as an extra benefit with the equivalent salary being the cost of the leap so you have no tax liability from when you take it up
not sure how you deal with it now you're leaving unless you check if ca apply for a refund as suggested above?

Benefit and Leaving

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