PRSI, Levies and the Universal Social Charge, Finance Act 2012

Appendix I Employer’s Guide to Operating PAYE and PRSI for Certain Benefits
Chapter 1 Introduction
1.1 Introduction
1.2 New arrangements
1.3 Benefits to which new arrangements do not apply
1.4 Use of terms “employees” and “PRSI” in this Guide
1.5 Lo-call number for information or assistance
1.6 Legal disclaimer
Chapter 2 Overview of New System
2.1 Background
2.2 Summary of procedures which apply from 1 January 2004
2.3 Small benefits
Chapter 3 Application of PAYE and PRSI to Benefits
3.1 Best estimate
3.2 Application of PAYE and PRSI to notional pay
3.3 Insufficient money wages or salary in pay period
3.4 Employee fails to reimburse employer
3.5 Spreading the liability throughout the year
3.6 Employer arrangements to discharge employees’ liabilities to tax and PRSI
Chapter 4 Valuation of Benefits: General
4.1 General rule
4.2 Payments on behalf of employees – general
4.3 Payments of medical insurance/tax relief at source/tax credits
4.4 Vouchers
4.5 Goods provided by employer
4.6 Transfer of assets
4.7 Summary table for certain benefits
4.8 Specific statutory valuation rules
Chapter 5 Private Use of Company Cars
5.1 General
5.2 Ready reckoners
5.3 Meaning of “car”
5.4 Cars in “car-pools”
5.5 Calculation of “cash equivalent”
5.6 Three-steps to calculating “notional pay” for company car
5.7 Alternative basis for certain employees with low business mileage
5.8 Company car not available for full year
5.9 Change of car during tax year
5.10 Lump sum contributions by employees
5.11 End of year adjustment
5.12 Car allowances
Chapter 6 Private Use of Company Vans
6.1 Private use of company van
6.2 Travel to and from work
6.3 Meaning of “van”
6.4 Cash equivalent of private use of van
6.5 Van with subsequent modifications
6.6 Employee makes good to employer
6.7 Vans in “van- pools”
6.8 Van Allowances
Chapter 7 Free or Subsidised Accommodation
7.1 Employer-owned accommodation
7.2 Employee required to live on premises
7.3 Rented accommodation
7.4 Associated costs
7.5 Furniture
Chapter 8 Free Use of Assets (other than accommodation, company cars or vans)
8.1 Calculation of taxable benefit
8.2 Examples of calculations
8.3 Loan of art objects
Chapter 9 Benefit of Preferential Loans
9.1 Preferential loans
9.2 Specified rates
9.3 Taxable benefit to which PAYE and PRSI applies
Chapter 10 Other Benefits
10.1 Company shares
10.2 Pension contributions
10.3 Meals and meal vouchers
10.4 Crèche/childcare facilities
10.5 Sports and recreational facilities
10.6 “En Bloc” payments
10.7 In-house medical plans/corporate general practitioner services
10.8 Staff discounts
10.9 Christmas parties and other inclusive events
10.10 Travel passes
10.11 Car parking
10.12 Work-related supplies
10.13 Laptops
10.14 Mobile phone provided by employer
10.15 Home high-speed internet connection
10.16 Computers and other equipment provided in employee’s home
10.17 Home telephone provided by an employer
10.18 Corporate charge cards
10.19 Medical check-ups
10.20 Course or exam fees
10.21 Professional subscriptions
10.22 Provision of newspapers, periodicals etc.
10.23 Examination awards
10.24 Exceptional performance awards
10.25 Staff suggestion schemes
10.26 Long service awards
Chapter 11 Records to be kept – Audit of Records
11.1 Records to be kept
11.2 Completion of forms P35, P45 and P60
11.3 Form P11D
Appendix 1 Ready Reckoners
Appendix 2 Leaflet IT 51 – Employees’ Motoring Expenses
Appendix 3 Leaflet IT 69 – e-Working and Tax
Appendix 4(i) Removal Expenses – Statement of Practice SP IT/1/91
Appendix 4(ii) Removal Expenses – Tax Briefing Issue 31
Appendix 5 Exemption for Monthly/Annual Bus or Train Passes
Appendix II Code of Practice for Determining Employment or Self-Employment Status of Individuals
Appendix III Income Tax - Statement of Practice SP – IT/1/07
PART A
A.1 General
A.2 Events giving rise to a charge to tax under unapproved share option schemes
A.3 Tax consequences of the grant of an unapproved share option
A.3.1 Tax charging provisions relating to the grant of an unapproved share option
A.3.2 Gain arising on the grant of an unapproved share option
A.4 Tax consequences of the exercise, assignment or release of share options under an unapproved share option scheme
A.4.1 Tax charging provision relating to the exercise, assignment or release of share options under an unapproved share option scheme
A.4.2 Gain arising on the exercise, assignment or release of share options under an unapproved share option scheme
A.5 Calculating the gain chargeable to income tax
A.5.1 General
A.5.2 Example of the income tax treatment of a ‘short option’.
A.5.3 Example of the income tax treatment of a ‘long option’.
A.6 Individuals leaving Ireland -Income Tax
A.7 Share options acquired prior to the individual becoming Irish resident for tax purposes - position re Section 128 TCA 1997 prior to the date of effect of Section 16 Finance Act 2005
A.8 Section 16 Finance Act 2000
A.9 Post commencement of Section 16 Finance Act 2005 - Non-resident individuals none of whose duties of employment are exercised in the State
A.10 Section 15 Finance Act 2006 and share options acquired before, on or after 1 January 2006
A.11 Relevant Tax on a Share Option (RTSO)
PART B
B.1 Interpretation of relevant provisions of Irish Double Taxation Treaties (DTAs) based on OECD Model Tax Convention
B.2 DTA character of gains from the exercise, assignment or release of share options
B.3 Income from Employment Articles of DTAs
B.3.1 Employment Income
B.3.2 Period of employment for which share options have been granted
B.3.3 Share option granted when resident of Ireland and exercised when resident of a DTA country
B.3.4 Share options granted to an employee while a resident of a DTA country and part of referable employment exercised in Ireland
B.3.5 Share options granted in respect of an Irish employment but part of the period of employment for which the share option was granted was exercised in a non-DTA country
B.4 Capitals Gains Tax (CGT) on disposal of shares acquired
B.5 Directors’ Fees Article
B.6 Long Option - Credit where charge to income tax imposed the date of grant
B.7 Maximum Double Taxation Relief
B.8 Relevant Tax on Share Options (RTSO)
B.8.1 Interaction of RTSO and double taxation relief
Appendix
Revenue eBrief No. 17/11
Revenue eBrief No. 24/11
Appendix IV SW14 – Main PRSI Changes from 2 July 2011
Appendix V Universal Social Charge FAQ’S
1. Universal Social Charge (USC) General Provisions
1.1 What is the Universal Social Charge?
1.2 Who is liable for the Universal Social Charge?
1.3 Are there special treatments for older persons?
1.3A Are there special treatments for full medical card holders?
1.4 What is exempt from the Universal Social Charge?
1.5 Will the Universal Social Charge apply to non-domiciles?
1.6 I am a non-resident director – will I be liable to pay Universal Social Charge?
1.7 What are the rates and thresholds of the Universal Social Charge?
1.8 Are the higher rates being charged on all earnings or just on the earnings over the relevant threshold?
1.9 How is the Universal Social Charge collected?
1.10 What income is liable for the Universal Social Charge?
1.11 Will redundancy payments be subject to the charge?
1.12 I am separated from my spouse or civil partner, and paying maintenance payments. How are these payments treated for Universal Social Charge purposes?
1.13 Are share option gains, chargeable to income tax under section 128 of the Taxes Consolidation Act 1997, liable to the Universal Social Charge?
1.14 In the case of “restricted shares” to which section 128D Taxes Consolidation Act 1997 applies, is the Universal Social Charge payable on the gross amount chargeable to income tax or on the abated amount?
1.15 Is my employer’s contribution to an approved retirement benefit scheme liable to Universal Social Charge?
1.16 I earn interest from a deposit account but have been exempted from DIRT because I am aged 65 years and will have total income from all sources of less than €18,000 for 2011. Do I have to pay USC on my interest income?
1.17 I am a public servant who paid Pensions Related Deduction (PRD) in 2010 that will be refunded in 2011. Will this refund be chargeable to USC?
1.18 Where can I find the Regulations governing the Universal Social Charge?
1.19 Does USC apply to the Public Service Pension Reduction (PSPR)?
2.PAYE Taxpayers and the Universal Social Charge
2.1 Are the first €10,036 p.a. (€4,004 in 2011) earnings exempt?
2.2 I’m over 70 years and my income is €25,000 - is the first €10,036 exempt?
2.3 My spouse or civil partner and I are both over 65 and taxed under joint assessment–are we exempt from the Universal Social Charge?
2.4 I have a medical card – do I pay Universal Social Charge on my wages?
2.5 Given that my employer/pension provider records my Dept of Social Protection Illness Benefit after 6 weeks for tax purposes [Note: this 6 weeks tax exemption is abolished with effect from 1 January 2012], will I now have to pay the Universal Social Charge on this benefit?
2.6 I earn €50,000 per annum – what rate of Universal Social Charge will I pay?
2.7 I earn €70,000 and my spouse or civil partner earns €120,000 (employment income) - what rate will we pay?
2.8 I am 45 years old and paid weekly. If I get a bonus of €6,000 will the Universal Social Charge apply at the 7% rate?
2.9 Are Occupational Pensions subject to the Universal Social Charge?
2.10 Will the Universal Social Charge affect tax credits?
2.11 Am I allowed a deduction for pension contributions?
2.12 My medical expenses are greater than my taxable income. Can I set the excess expenses against Universal Social Charge to reduce my liability to it?
2.13 Are couples in a marriage or in a civil partnership, who are jointly assessed, allowed double the threshold limits?
2.14 Short-term working arrangement Job Seeker’s Benefit is not taxable. Will I now have to pay the Universal Social Charge on it?
2.15 Should I pay the Universal Social Charge on travel expenses, etc?
2.16 If I change employment during the year and earn €50,000 with my first employer/pension provider and €100,000 with my second employer/pension provider will the higher Universal Social Charge rates automatically kick in?
2.17 Is it true that although I am exempt from income tax, I may still have to pay the Universal Social Charge?
2.18 I am a single person and will be 70 years old in June 2011. Will I benefit from the maximum 4% rate for all of 2011?
2.19 I have just left employment and my employer/pension provider has given me a Universal Social Charge Certificate along with my form P45. What do I do with the Universal Social Charge Certificate?
2.20 What if I have overpaid the Universal Social Charge? How can I claim a refund?
2.21 My employer makes a contribution on my behalf to my Personal Retirement Savings Account (PRSA). Is the charge payable in respect of this contribution given it qualifies for tax relief as a pension contribution?
2.22 I have overpaid the Universal Social Charge in 2011. How can I claim a refund?
2.23 I am employed in a bank and receive performance-related payments. Am I affected by the special tax on bank bonuses?
2.24 Does the Universal Social Charge have to be paid on pension lump sums?
2.25 I have made a gain on the exercise of share options. How do I pay USC on this gain?
2.26 I am a participant on a Community Employment Scheme and also earn €9,000 per year in a part-time employment. How will USC apply in my case?
2.27 I am a participant on a Community Employment Scheme and also earn €11,000 per year in a part-time employment. How will USC apply in my case?
3.Self-Assessed Taxpayers and the Universal Social Charge
3.1 How will the Universal Social Charge be collected?
3.2 I am self-employed – how do I calculate gross income for the purposes of the Universal Social Charge?
3.3 Can expenses be deducted?
3.4 Am I allowed to deduct capital allowances or losses?
3.5 Are exempt sources of income liable for the Universal Social Charge?
3.6 What Universal Social Charge should I include in my preliminary tax for 2011?
3.7 I have a medical card. Will this affect my liability for Universal Social Charge?
3.8 I am aged 60 and (in 2011) have self-employment income of €120,000 and also PAYE employment income of €60,000. What Universal Social Charge will I pay?
3.9 Is foreign employment income on which Transborder Relief is due, liable to the Universal Social Charge?
4.Employers/pension providers and the Universal Social Charge
4.1 As an employer/pension provider, what are my responsibilities in relation to the collection and remittance of the Universal Social Charge?
4.2 Who is responsible for deducting and returning the Universal Social Charge?
4.3 I am an employer/pension provider – when do I pay this Universal Social Charge?
4.4 If the employer/pension provider is responsible, what will the penalty be if the Universal Social Charge is not correctly administered?
4.5 Will there be an interest charge for late payment of the Universal Social Charge?
4.6 If all earnings are taken into account, how does an employer/pension provider know what an employee may earn in another employment to determine which Universal Social Charge % should be applied?
4.7 Are Dept of Social Protection payments added to income to determine whether the Universal Social Charge will be charged or not?
4.8 Is calculation of the USC different from calculation of PAYE and PRSI?
4.9 For employer/pension providers using Direct Debit, should their amounts be increased, to take account of the Universal Social Charge?
4.10 What records should employer/pension providers keep regarding the USC?
4.11 Should pay-slips record the Universal Social Charge details separately?
4.12 What revisions to forms have been made to cater for the Universal Social Charge?
4.13 What is the weekly/monthly, etc. breakdown of the Universal Social Charge thresholds?
4.14 Where a payment is made for a period of less than, or more than, a week/month/etc., have the weekly/monthly/etc. threshold amounts to be adjusted accordingly?
4.15 Circumstances in which employers/pension providers should make adjustments to the Universal Social Charge liabilities at the end of 2011
4.16 How is the Universal Social Charge applied to holiday pay paid in advance of the usual pay day?
4.17 A four-weekly paid employee is receiving holiday pay paid in advance in respect of two weeks holidays. How is the Universal Social Charge applied in this case?
4.18 A weekly paid employee is receiving holiday pay paid in advance in respect of 4 weeks holidays. How is the Universal Social Charge applied in this case?
4.19 An employee is due to receive back pay in 2011. Even though the back pay relates to an earlier year(s), will the payment be subject to the Universal Social Charge?
4.20. Does the USC reduce the gross pay for PAYE/PRSI purposes?
4.21 An employee reaches 70 years of age during the year after having paid the higher rate of 7% on some of their earnings. What is the employer to do?
4.22 Universal Social Charge Certificate (2011) on cessation of employment
4.23 How is the Universal Social Charge applied in cases where an exclusion order has been issued?
4.24 Are employees within the Employer PRSI Exemption scheme exempt from the Universal Social Charge?
4.25 Is Maternity Benefit subject to the Universal Social Charge?
4.26 How are employers to treat payments arising in week 53 for Universal Social Charge purposes – given the particular arrangements set out in the Employment Regulations on how such income is treated for deduction of PAYE purposes?
4.27 Where an employee has two sources of income, one or both of which is under the exemption threshold of €10,036 p.a. (€4,004 in 2011), but which when combined will exceed the threshold, can the employee opt to pay the Universal Social Charge at a rate higher than the gross pay would suggest?
4.28 How are employee contributions and employer contributions to a Permanent Health Insurance scheme treated for USC purposes?
4.29 My employer makes a contribution on my behalf to my Permanent Health Insurance Scheme. Is this contribution subject to the USC?
4.30 How is the Universal Social Charge applied in cases where an individual holds a full medical card?
4.31 How are arrears of pay due to an employee who has ceased employment treated for USC purposes?
4.32 As and from 1 January 2012, the deduction of USC has changed from a week 1 basis (as applied in 2011) to a cumulative basis – similar to the manner in which PAYE is deducted. What are the main changes for employers?
4.33 What are employers to do where they have not received 2012 P2Cs in time to run January 2012 payroll(s)?
4.34 How will the emergency basis of USC operate?
4.35 An employee commences employment in 2012 and hands in a 2011 P45. As there is no USC details shown on pre-2012 P45’s, how is the new employer to calculate USC deductions?
4.36 Revenue provides an electronic Tax Deduction Card (eTDC) at www.revenue.ie/en/business/paye/e-tax-deduction-card.html. Has this eTDC been revised to accommodate cumulative USC?
4.37 How will the USC information be shown on the paper version of employer 2012 Tax Credit Certificates (P2Cs)?
4.38 How will the USC Exemption Marker on 2012 Employer Tax Credit Certificates (P2Cs) work?
4.39 On the Employer Tax Credit Certificate (P2C) - What is the difference between the Income Tax (PAYE) Exemption marker and the USC Exemption marker?
4.40 – The basis of deduction (cumulative or week 1) is stated on the 2012 P2C – will the same basis of deduction apply to both PAYE and USC?
4.41 What changes have been made to the P45
4.42 What is the employer to do when a new employee gives them a P45?
4.43 Where a P2C indicates the employee is exempt from USC, if the employee has paid USC already in the tax year, should this USC be refunded?
4.44 The employer tax credit certificate (P2C) shows employees’ yearly, monthly and weekly USC cut-off points. What cut-off points are used for fortnightly and four-weekly paid employees?
4.45 Where Revenue determine that an employee is exempt from paying USC, the P2C issues showing an exemption marker and no USC cut-off points. If this employee subsequently ceases employment how does the employer complete the USC fields on the P45?
4.46 Payments such as DSP payments, payments paid under the Community Employment Schemes, Back to Education Allowance, etc. [See Appendix A for further examples] are exempt from USC. How are these payments to be treated in payroll?
Appendix A List of Social-Welfare-Like Payments
Appendix B Exempt Income Sources
Appendix C Capital allowances for buildings
Appendix D Universal Social Charge (USC) Certificate 2011
Appendix E 2012 Employer Tax Credit Certificate (paper) - P2C
Appendix F 2012 Form P45 - Part 1
Appendix G LoCall phone numbers for PAYE employees
Appendix VI Revenue eBrief No. 81/11
Revenue eBrief No. 82/11
Appendix VII Tax Treatment of Flight Crew Members
Appendix VIII Recent Statutory Instruments