Session 5

Question 1

What is taxed in Schedule E

Answer 1

Employment income e.g

• Salary, Bonus, commisions etc
• Private Pensions
• Benefits in Kind
• Taxable social welfare

Question 2

Whats the differences between being Employed and Self Employed

Answer 2

• Employees are hired under a contract OF service.

Self employed individuals are employed under a contract FOR services.

Question 3

How to value a transfer of an asset both new and old for BIKs and tax

Answer 3

If used then mkt value

If new then the cost to the employer

Question 4

What are the BIK percentages for

1. Transfer of an asset
2. Accommodation
3. Company Car

Answer 4

1. Transfer of an asset 5%
2. Accommodation 8%
3. Cash equivalence

or for low mileage company car 80% of cash equivalents

Question 5

What Valuation do we use for Transfer of an Asset for BIK?

Answer 5

Used - Market Value of Asset at date of transfer

New – Cost to the Employer

Bik:
Annual Value of its use (5% of market value), plus

Any connected day to day outgoings

Question 6

What valuations do we use and how do we calculate BIK tax for accommodation?

Answer 6

We use the market value plus any outgoings incurred by the employer

exceptions:
- If its deemed necessary for you stay in a certain place to fulfill your duties e.g. lighthouse man

• If you are on call

HOWEVER DIRECTORS ARE EXEMPT FROM ALL EXCEPTIONS

Question 7

What valuations do we use and how do we calculate BIK tax for accommodation?

Answer 7

BIK = Cash Equivalent of the private use LESS amounts made good by employee

Cash equivalent = % of Open Market Value (OMV)
- This figure is got from the chart and it depends on the anual BUSINESS travel

Question 8

Steps involved in Calculating BIK for company car

Answer 8

1. Calculate OMV (list price including VAT and VRT)
2. Calculate business travel (usually reduce by 8km for private travel)
3. Calculate cash equivalent using the table
4. If car not available for full year threshold limits and % should be reduced proportionately
5. Reduce cash equivalent by any amount reimbursed by employee directly to employer (any excess c/f)

Question 9

Steps involved in Calculating BIK for company car

Answer 9

BIK = Cash Equivalent less any amount made good

Cash Equivalent = 5% of the OMV

Business related travel % does not apply to vans

Vans that are exempt from BIK:
Van necessary for performance of duties

Employee required to keep van at private residence when not in use

Apart from travel to and from work, other private use is prohibited, and employee spends at least 80% of time away from premises

Question 10

How to calculate the BIK for preferential loans?

Answer 10

there are two specified rates

1. Qualified home loan 4%
2. All other loans 13.5%

you take what rate they charge for the loan (usually it is zero) and take away the specified
e.g. 4-0 therfore 4 home loan BIK rate

Question 11

How are Termination payments taxed

Answer 11

the tax free amount is the higher of

1. Basic Exemption
   - €10,160 + (€765 x complete years service)
2. Increased Exemption
   - Basic Exemption + €10,000 – PV pension lump sum
3. Standard Capital Superannuation Benefit (SCSB)
   - (Average annual salary for last 3 years)/15 x complete year service – PV pension lump sum