Paycheck Plus - Making Payroll Easy

Employers Tip- October 2011:  Let Paycheck Plus help you comply with your Employer Pension Obligations

Paycheck Plus now has an associate Qualified Financial Advisor who can help you, set up a pension scheme for your employees.

Contact Paycheck Plus today and we will arrange a meeting for you with our associate QFA who will advise you of the best Pension Scheme options for your employees.

All employers are required by law to provide access to a pension for all employees whether they are in full time, part-time, temporary, contract or casual employment. If there is no in-house scheme, or there are restrictions on entry, contribution amounts or benefits, then a Personal Retirement Savings Account (PRSA) must be offered by law. Failure to comply is a criminal offence and could result in a fine of up to €12,700 and/or up to 2 years imprisonment.

The employer may contribute to the PRSA if they wish, but are not obliged to do so. The employer is obliged to allow employees time to explore the PRSA in-depth and discuss their scheme with an advisor during paid working hours.

Providing a Company pension or occupational pensions scheme is a tax-efficient savings plan put in place by the employer to provide a retirement income for employees. The employee also pays less PAYE on their relevant earnings.

Help your employees to recognise the benefits available to them from Revenue as they make a contribution towards their retirement. A useful pension calculator is available at www.pensionsboard.ie

Attending the inaugural National CFO & Finance Directors’ Forum in Croke Park this week, the Team at Paycheck Plus were inspired by the refreshing sharing of information and insight from some of the most powerful executives in Ireland.  Coming from a range of sectors, the delegates left the confines of their offices to share ideas and inspiration on the emerging role of the Financial Executives role in Irish business.  As one speaker aptly described it, CEO’s have become CEEOs (Chief Everything Else Officers) and no longer wear only the Finance Hat. 

This dynamic group of people are only too well aware of the need to use their many talents for the benefit of their organisatons as they enter a new stage in Irish business.  These people are changing from the traditional laborious routine of producing reports that previously went un-read and turning their attention to driving growth in the future. 

 With a lively discussion on Shared Services and Business Process outsourcing, companies all over Ireland are looking at ways of focusing their time on their expertise and leaving the more repetitive and back-office tasks to those who specialise in those areas.

Paycheck Plus was delighted to meet many of the delegates on the day to discuss the benefit of using a payroll outsource company to not only provide a service, but to work as a partnership to ensure their payroll is operating in an efficient and effective manner.   In this maturing market, successful companies have proved that Payroll Outsourcing works – it brings real savings and efficiency in many cases while enabling the Finance Team use their key skills to develop a successful strategy for the continued growth and development of their respective businesses.

Tax Relief in respect of Tuitions fees for Third Level Education

As many students commence study at this time, it’s worth considering if you can claim tax relief on Third Level education fees for yourself or anyone for whom you pay third level fees.  Relief is available at the standard rate of tax (currently 20%) subject to a maximum limit of €7,000 for the academic year 2011- 2012.

For 2011 and subsequent years, the first €2,000 of any claim is disregarded for relief where the student is studying full time or by €1,000 where the student is studying on a part-time basis.  From this academic year, 2011 – 2012, the relief is allowable in respect of tuition fees including the Student Contribution.  Relief is not available in respect of registration, administration or examination fees or any part of the fee that is, or will be met by grants, scholarships, by an employer or so on.

Relief is available per student, per course, per academic year so if you are paying college fees for more than one student in this academic year, you may claim relief in respect of the fees paid for each person.

Further details of this tax relief is available from the Revenue Information Leaftlet IT31 and a list of approved colleges and courses is available on the Revenue Website at  http://www.revenue.ie/en/tax/it/reliefs/tuition-fees.html#section6

Relief can be claimed on individuals tax returns at the end of the tax year or during the year once fees have been paid and the relief can be granted on a tax credit certificate.  You can apply for the relief by completing the application form at http://www.revenue.ie/en/tax/it/forms/it31-form.pdf

Details of any payments received or to be received towards the fees must accompany the claim.  You should retain all receipts regarding the claim for tuition fees for a period of 6 years as they may be requested for verification at a later date.

National Payroll Week celebrates the hard work and dedicated service provided by payroll personnel such as the Payroll Team at Paycheck Plus in Ireland. It is their responsibility to guarantee accurate and timely payment of salary and wage payments for more than 1.8 million employees. The work of payroll personnel is usually taken for granted and often goes unrecognised and unrewarded, despite the fact that they play a vital role in every company. Payroll personnel in Ireland are responsible for implementing and complying with a wide range of taxation, social welfare and employment legislation and in the course of doing do, they process over 80 million payslips a year, and collecting and remitting more than Euro16 billion in income tax, PRSI contributions and levies to the Irish Revenue Commissioners each year..  To our Payroll Team here at Paycheck Plus and to all other payroll personnel we say Thank You and well done for keeping Ireland paid!

The month of August starts with a new location for the team at Paycheck Plus.  Moving from our starter space in Clogherhead we are now resident in the IDA Enterprise Park in Dunleer, Co Louth.  Our new offices will allow for continued growth and development of the business.  We look forward to welcoming clients and suppliers to Unit 9.  Thanks to everyone who helped with the move and for the good wishes.

A Judgment of the High Court on Thursday 7th July 2011 means that all of the seventeen Employment Regulation Orders (EROs) ceased to have statutory effect from that date and cannot be enforced.
It has been declared that the relevant provisions of the 1946 and 1990 Industrial Relations Acts are unconstitutional because they allowed for an impermissible excessive delegation of law-making power concerning pay and conditions to the Labour Court in the absence of any guiding policies or principles.

Employers are not obliged to comply with any ERO when offering terms and conditions to new employees as of the 08th July 2011. However, employers must pay their employees in accordance with existing employment legislation such as the National Minimum Wage Act.

Please note that this court ruling has no direct effect on the wages and terms and Conditions of existing employees. An employer may not reduce the current wages unless they have written agreement from the employee.

Where prosecutions for non-compliance with an ERO have been commenced these will have to be withdrawn. No further prosecutions can be initiated in relation to compliance with EROs that were in place prior to 7th July 2011. NERA also informed us that any ongoing inspection that commenced prior to the decision will no longer consider the applicability of ERO rates.

Subsequent to the ruling the Department of Enterprise examined two possibilities: enacting emergency legislation to provide temporary protection for workers pending enactment of comprehensive reforms, and appealing the judgment that would likely have the result of providing a stay on its effects.
As a result of these consultations, it was made clear that neither option is viable.

Minister Bruton has informed us that legislation will be introduced to the Dáil very early in the next term with prioritised enactment thereafter.

Employers PRSI rate has been halved from 8.5% to 4.25% from 2^nd July 2011.

 All employees earning less than 356 Euro per week will be eligible for the new Employers PRSI rate.

The minister announced a reduction in the employer PRSI rate from 8.5% to 4.25% to assist in job creation. This will reduce employer costs in the creation of new jobs. This new rate will apply from 2^nd July 2011 until the end of 2013. This is a welcome move which will hopefully assist businesses in these difficult times.

Employer contributions to PRSAs – Income Tax, PRSI and USC

The purpose of this eBrief is to clarify for employers and payroll practitioners how employer contributions to an employee’s Personal Retirement Savings Account (PRSA) are to be treated for Income Tax, PRSI and USC purposes.

Benefit-in-kind (BIK)

An employer contribution to an employee’s PRSA is treated as a taxable BIK for the employee. However, for the purposes of obtaining tax relief on pension contributions, the employee rather than the employer is deemed to have made such a contribution to the pension fund (section 787E(2) Taxes Consolidation Act 1997). The effect of this provision is that the tax relief on the contribution negates the taxable BIK on the benefit provided. This treatment only applies where the employer contribution does not exceed certain limits based on the age of the employee.

Section 985A of the Taxes Consolidation Act 1997 provides that an employer is not obliged to operate PAYE on contributions to a PRSA for an employee.

Income Tax

It should be noted that while employer contributions to a PRSA are a taxable benefit in the employee’s hands, these same contributions qualify for full tax relief subject to certain age-related limits. They are not subject to PAYE. It is the employee’s responsibility to contact Revenue where such contributions exceed the tax allowable limits to ensure the correct tax is paid on any excess contributions.

Employers should maintain appropriate records of their contributions to an employee’s PRSA. Employers may choose to put the contributions through payroll for the purposes of record-keeping. However, if this is done it should be cost-neutral (for Income Tax and PRSI ) to the employee and the employer.

The employer should return these contributions on form P11D when requested by Revenue to do so.

PRSI

This eBrief addresses the treatment of employer contributions to an employee’s PRSA. Since 1 January 2011, employee contributions to a PRSA are chargeable to PRSI – fully chargeable in the case of the employee and 50% chargeable in the case of the employer.

In general, PRSI is only charged on emoluments that are taxed under the PAYE system. While employer PRSA contributions are a taxable BIK, they are not taxed under PAYE and are thus not chargeable to PRSI (both employer and employee share).

Where employer PRSA contributions have been put through payroll and PRSI has been deducted, employers should make the necessary adjustment to payroll.

Universal Social Charge (USC)

Since 1 January 2011, USC is chargeable on the taxable BIK of an employer contribution to an employee’s PRSA.

VAT – 9% rate on certain goods and services from 1 July 2011

Finance (No.2) Act 2011 introduced a second reduced VAT rate of 9% to apply in respect of supplies of certain goods and services for the period 1 July 2011 to 31 December 2013.

The 9% rate applies to certain goods and services previously liable at the 13.5% rate, including restaurant and catering services; hotel and holiday accommodation; admissions to cinemas, theatres, certain musical performances, museums and art gallery exhibitions; fairgrounds or amusement park services; the use of sporting facilities; hairdressing services; printed matter such as brochures, maps, programmes, leaflets, catalogues and newspapers.

From 1 January 2014 the rate on these goods and services will revert to 13.5%.

See information leaflet: Rate change – 9% on certain goods and services from 1 July 2011.

With school holidays on the horizon you might be considering employing school children or young people during the summer months. Be aware that under the Protection of Young Persons (Employment) Act 1996, if you are employing individuals under the age of 18 years there are certain statutory obligations in relation to hours of work, breaks, rest periods and payment of wages.   Although the minimum wage is being reversed to €8.65 per hour from 1st July 2011, the rate applicable to those under the age of 18 is less.

A number of these provisions however, do not apply in the context of employment of close family members. Where such family members are employed PAYE should be operated in the normal way, which involves applying to the tax office for a tax certificate for the individual concerned.

For more information contact our Payroll Team at info@paycheckplus.ie