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One4All - Small Benefit Relief of €500

  • 29-11-2016 03:31PM
    #1
    mrcheez
    Registered Users, Registered Users 2 Posts: 14,235 ✭✭✭✭


    Just curious how these work.

    Is it that the company can give their employee €500 instead of spending the €500 on their tax bill?

    e.g. say a company has an annual tax bill of €5,000.

    If they give 2 employees the €500 One4All voucher, does the company then pay 2 x 500 less, e.g. they now pay €4,000 tax?


Comments

  • #2
    scheister
    Registered Users, Registered Users 2 Posts: 1,312 ✭✭✭scheister


    If the company pays their staff cash as a bonus it is liable to income tax prsi and USC So if someone is pays all the higher bands of tax they will lose €52 of every hundred of their bonus (40% IT 8% USC 4% PRSI) It will also cost the employer PRSI of 10.75% on the cash bonus.

    If they pay with a voucher you get the full amount free of tax up to the €500 limit.


  • #3
    Seve OB
    Registered Users, Registered Users 2 Posts: 16,203 ✭✭✭✭Seve OB


    scheister wrote: »
    If the company pays their staff cash as a bonus it is liable to income tax prsi and USC So if someone is pays all the higher bands of tax they will lose €52 of every hundred of their bonus (40% IT 8% USC 4% PRSI) It will also cost the employer PRSI of 10.75% on the cash bonus.

    If they pay with a voucher you get the full amount free of tax up to the €500 limit.

    Now I don't know if Cheeze has got his question wrong, but that is not what he asked!

    I am guessing he might be referring to a hubby/wife owned company and he is trying to limit their tax bill
    mrcheez wrote: »
    Just curious how these work.

    Is it that the company can give their employee €500 instead of spending the €500 on their tax bill?

    e.g. say a company has an annual tax bill of €5,000.

    If they give 2 employees the €500 One4All voucher, does the company then pay 2 x 500 less, e.g. they now pay €4,000 tax?

    If a companies tax bill is €5k, then this will be 12.5% of their profits (all things being simple). So the company profits would have been €40k.

    Pay to employees a €500 one for all voucher (get a perfect card instead-they are better), now companies taxable profits are €39k

    Tax bill is now €4,875. So yes, a small saving to the company, but also a saving to the company in PRSI costs along with a tax free benefit to the employee.

    Might be even better if your kids worked in the company also, as I'm sure you would want to give them all tax free vouchers :eek:;)


  • #4
    mrcheez
    Registered Users, Registered Users 2 Posts: 14,235 ✭✭✭✭mrcheez


    Ah ok so the company doesn't reduce their tax bill by giving these.

    Was just curious why our place was still issuing €250 instead of going up to €500. So it's clearly an additional cost.


  • #5
    Seve OB
    Registered Users, Registered Users 2 Posts: 16,203 ✭✭✭✭Seve OB


    mrcheez wrote: »
    Ah ok so the company doesn't reduce their tax bill by giving these.

    Was just curious why our place was still issuing €250 instead of going up to €500. So it's clearly an additional cost.

    They do, but the cost doesn't come off the tax bill, it comes off the taxable profits, so they will pay less tax because they make less profit.

    Yes, an additional cost to the company.


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