Michelle Dunne, Employment Tax Director with Grant Thornton
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What is the main topic discussed in this episode?
Breakfast Business with Enterprise Ireland on Newstalk.
What are the implications of receiving gifts from employers?
Some of you out there may have already had free gifts from your employer. Some of you may have received a prepaid credit card and some of you will have received other rewards from your companies. But employers and employees need to know the total value in any year can never exceed €1,500 if benefit in kind is to be avoided. We're also approaching the deadline for contractors who aren't yet on the payroll to be registered with vet revenue if most of their income comes from one company. Michelle Dunn is Employment Tax Director with Grant Thornton and is with us to talk us through it. Thank you very much for joining us, Michelle.
Good morning, Joe.
How can employers avoid Benefit in Kind charges?
Can we start with those Christmas gifts? What are we allowed to give our staff and what are we not allowed to gift them?
Well, Joe, there is what's called the small benefit exemption, whereby an employer can gift up to five benefits in a year. They cannot total more than fifteen hundred. Those benefits have to be non-cash. They can be in the form of a voucher or they might be in the form of a tangible gift. So either or is acceptable. But as I said, no more than five and no more than fifteen hundred in a year.
So you could. So if, for example, you give your member of staff a Christmas hamper and it's worth about 200 euro, that is deducted from the 1500, meaning you can only give whatever 1300 euro for the rest of the year.
That's right, Joe. So what you might find sometimes is that perhaps that allowance has been used up maybe earlier in the year and perhaps that there's no allowance left for the employee there. So if, for example, the €1,500 voucher was given maybe in April this year and now an employer wants to provide a Christmas hamper, that's going to be taxable because it's over and above the €1,500 limit.
OK, now is there a difference between hospitality paid for by companies for their clients and hospitality could be a big Christmas party given to their staff?
There is. So client entertainment is fine. There's no benefit in kind chargeable on the employee for that. Whereas staff entertainment, there's a concession from revenue concerning staff entertainment. And it talks about that entertainment being reasonable in cost and open to all employees. So it's very much an event. And you can't exclude anybody. You can't exclude anybody. The examples cited by Revenue really are those sorts of seasonal events. So we're talking Christmas parties, we're talking maybe summer barbecues. They also mention things like staff sports days. So those events are fine, they're not going to attract a benefit in kind once it falls into that reasonable and open to all. The risk might be where it doesn't fall within that concession.
So staff entertainment that is not within those concessionary parameters will attract a benefit in kind that needs to be levied by the employer.
And how would revenue ever know if you've given a summer barbecue or if you've given a Christmas party?
Yeah what happens here Joe really is that an employer might be selected for an audit and that might be through revenues detection system or perhaps it could be a random audit and through that audit process revenue will analyse the books and records of a company so they will download and request information pertaining to staff entertainment so it might be denoted in general ledgers you might have company credit cards you know where the narrative is and to something that might be like a staff entertainment event. And revenue will look for backup and support around whether that perhaps is client entertainment or staff entertainment. And the onus is on the employer to provide that proof.
What is the small benefit exemption for employee gifts?
And they might even ask for the names of the participants, of those people who are there.
That's right, yeah. And revenue even goes far as in our guidance to talk about where benefit in kind is levied. You effectively take the cost of that event and divide it to the employees that attend it, if benefit in kind is due on it, and charge it to the employee.
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