review of approved profit sharing scheme
Download
Skip this Video
Download Presentation
Review of Approved Profit Sharing Scheme

Loading in 2 Seconds...

play fullscreen
1 / 27

Review of Approved Profit Sharing Scheme - PowerPoint PPT Presentation


  • 153 Views
  • Uploaded on

Review of Approved Profit Sharing Scheme. Kathleen Corley Revenue Commissioners. Review of Approved Profit Sharing Scheme. Legislation introduced in 1982 Key principles all employee similar terms Revenue concerns Review of administrative practices.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Review of Approved Profit Sharing Scheme' - palani


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
review of approved profit sharing scheme
Review of Approved Profit Sharing Scheme

Kathleen Corley

Revenue Commissioners

24 March 2009

review of approved profit sharing scheme1
Review of Approved Profit Sharing Scheme
  • Legislation introduced in 1982
  • Key principles
    • all employee
    • similar terms
  • Revenue concerns
  • Review of administrative practices

24 March 2009

review of approved profit sharing scheme2
Review of Approved Profit Sharing Scheme
  • IPSA submission
  • Use of bonuses
    • Fixed
    • Discretionary
    • Sales commission
    • Team bonuses
  • Certain other agreed payments

24 March 2009

review of approved profit sharing scheme3
Review of Approved Profit Sharing Scheme
  • Carry forward of contributions
    • Salary forgone
    • Contributory schemes
  • Different bonus dates
  • Electronic communications
  • APSS schemes for sister companies

24 March 2009

apss use of bonuses
APSS - Use of bonuses
  • Original intention of legislation
  • Use of bonuses generally
    • Funding of acquisition of shares - company
    • Basis of entitlement – participants
  • Continue with general principle

24 March 2009

apss use of bonuses1
APSS - Use of bonuses
  • Fixed bonus
    • Contractual entitlement (written or implied)
  • Tax Briefing Issue No 56 (July 2004)
  • No change in Revenue’s position

24 March 2009

apss use of bonuses2
APSS - Use of bonuses
  • Discretionary bonuses
  • Payment and amount at discretion of employer
  • Performance criteria/performance appraisal schemes
  • No change in practice

24 March 2009

apss use of bonuses3
APSS - Use of bonuses
  • Team Bonuses
  • Revenue will now consider these
    • Not fixed
    • Team performance measures
      • Business results
      • Other objective tests

24 March 2009

apss use of bonuses4
APSS - Use of bonuses
  • Different teams
    • Equal opportunities
    • Measurement of achievement
    • Ratings applied
  • Full particluars to Employee Share Scheme Section

24 March 2009

apss use of bonuses5
APSS - Use of bonuses
  • Sales and non-sales staff
  • Different bonus structure
  • Sales commission
  • Similar terms rule paramount
  • Portion of sales commission can be used
  • Full particulars to Employee Share Scheme Section

24 March 2009

apss use of bonuses6
APSS - Use of bonuses

Example

Discretionary bonus payable to non-sales staff under a performance appraisal scheme 0- 5%

Sales Commission payable to sales staff under a performance appraisal scheme 0-20%

24 March 2009

apss use of bonuses7
APSS - Use of bonuses
  • Non-sales employee received 5% bonus
  • Sales employee received 20% sales commission
  • Lowest common percentage is 5%
  • Maximum amount that can be invested in APSS is to be determined using the formula:

24 March 2009

apss use of bonuses8
APSS - Use of bonuses
  • Lowest maximum common denominator x Bonus % Maximum bonus %
  • Non-sales employee can invest: 5 x 5 = 5%

5

  • Sales employee can invest: 5 x 20 = 5%

20

24 March 2009

apss use of bonuses9
APSS - Use of bonuses

Example

Discretionary bonus payable to non-sales staff under a performance appraisal scheme 0- 5%

Sales Commission payable to sales staff under a performance appraisal scheme 0-20%

Non-sales employee received 5% bonus

Sales employee received 10% sales commission

24 March 2009

apss use of bonuses10
APSS - Use of bonuses
  • Lowest common percentage is 5%
  • Maximum amount that can be invested in APSS is to be determined using the formula:
  • Lowest maximum common denominator x Bonus %

Maximum bonus %

24 March 2009

apss use of bonuses11
APSS - Use of bonuses
  • Non-sales employee can invest: 5 x 5 = 5%

5

  • Sales employee can invest: 5 x 10 = 2.5%

20

24 March 2009

apss use of bonuses12
APSS - Use of bonuses
  • Agreed payments
  • Collective bargaining arrangements
  • Cost savings, changes in work practices, transformation, staff reductions; increased productivity
  • General position – no change
  • Examine each case based on specific facts

24 March 2009

apss carry forward of contributions
APSS – Carry forward of contributions
  • Salary Forgone
    • Similar terms at each appropriation date
    • Exceptional circumstances – different dates
  • Carry forward within same tax year
    • Company funded shares appropriated first
    • Normal limits apply
      • Maximum 7.5% of salary or company’s contribution
      • 1:1 ratio

24 March 2009

apss carry forward of contributions1
APSS – Carry forward of contributions
  • Example

A bonus of €1,000 is payable to an employee on 31 March 2009. The employee is forgoing salary of €100 per month. The employee opts to take shares in lieu of his/her bonus. The market value of the shares at 31 March 2009 is €2.00 per share. The market value of the shares at 31 December 2009 is €1.00 per share.

24 March 2009

apss carry forward of contributions2
APSS – Carry forward of contributions

31 March 2009

  • Bonus – Shares appropriated to the value of €1,000 (500 shares with market value of €2.00 each).
  • Salary Forgone Jan – March €300 – 150 shares appropriated (market value €300).

24 March 2009

apss carry forward of contributions3
APSS – Carry forward of contributions

31 December 2009

  • Salary forgone April – December is €900. The maximum number of shares that can be appropriated is 350 (market value €350). The balance of the salary forgone €550 must be repaid to the employee after making appropriate PAYE/PRSI/Levies deductions.

24 March 2009

apss carry forward of contributions4
APSS – Carry forward of contributions
  • Contributory schemes (BOGOF)
  • Aggregate contributions insufficient to purchase whole number of shares
  • Carry forward within same tax year
    • Excess plus normal cannot > max allowable monthly contribution
    • Monthly contribution fixed at beginning of year
    • Participant’s agreement

24 March 2009

apss different bonus dates
APSS – Different bonus dates
  • Different bonus dates – management and other staff
  • Participant elects to take cash
    • Similar terms rules
    • At each appropriation date
  • Change in Revenue practice
    • Employee opts not to participate in APSS
    • Contract of participation/Form of acceptance
    • Need not defer payment of cash

24 March 2009

review of approved profit sharing scheme4
Review of Approved Profit Sharing Scheme
  • Electronic communications
  • No objection where no legal restrictions
  • Consent from participant
    • Electronic Commerce Act 2000

24 March 2009

review of approved profit sharing scheme5
Review of Approved Profit Sharing Scheme
  • Group schemes
  • Sister companies
  • Administration of one scheme for sister companies
  • No change in Revenue position

24 March 2009

summary
Summary
  • Protection of fundamental principles
  • Broadening of some practices
    • Sales commission
    • Team Bonuses
    • Different bonus dates – payment of cash
    • Carry forward of contributions
  • Next issue of Tax Briefing – early April

24 March 2009

ad