# Income Levy - Effective Date



## Marathon Man (7 Jan 2009)

The official effective date for the income levy was Thursday Jan 1st 2009

My wife, teacher, is normally paid every second Thursday. However last week her salary was credited to our bank a/c on Wed 31st Dec, the day BEFORE the levy came into force AND the income levy had been deducted from her salary.

Surely this is incorrect. OK I accept it should have been paid on Jan 1st, a Bank Holiday, but it wasn't. It was paid prior to the effective date so it follows that the levy was incorrectly deducted.

I presume that all others in receipt of State salary payments are in the same position.


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## Blinder (7 Jan 2009)

The date on her pay slip would be the offical pay date.
Was this Jan 1st?


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## Marathon Man (7 Jan 2009)

Pay slip is at home, so can't say right now. 

IMHO, official pay date has no bearing on it. The effective pay date was Dec 31st. Payment was made in 2008. It'll be interesting to see whether the period is in the 2008 or 2009 P35.

Article 4.21 of this http://www.revenue.ie/en/practitioner/law/income-levy.pdf states that any payments made in 2009 but which relate to 2008, or earlier, are subject to the levy. What this is saying is the date of payment is the effective date, therefore, imho, the levy does not apply to a payment made prior to Jan 1st 2009. 

It may have been made a day early for convenience, but it was still a 2008 payment.


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## Towger (7 Jan 2009)

Despite of what the fellow from FG was going on about on Drive Time last night, tax should be calculated for the date the money is received into the hand (or bank in your case). When the money was earned is irrelevant. For the previous 15? Years our income taxes have reduced, and you did not hear people moaning when they gained by being paid the following year.

In your cause, I take it she always gets paid on the 1st. Then the 1st is her proper pay date, which is of course in the new tax year. The 1st was bank holiday and (in theory) you can't get paid into the bank on a 'non bank working day', so being nice to you they paid the money in on the 31st, otherwise it would have gone in on the 2nd and people would be moaning about being paid late.

You don't state what frequency she is paid. If she her tax was calculated using the 31st it would open up a whole host of problems with week 53, fortnight 27, 4 week 14 or a month 13!!. If you tell me what frequency she is paid by I'll tell you which problems will occur


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## Marathon Man (7 Jan 2009)

She's paid fortnightly. I've a feeling that she got a notice about last year being a 53 week year, not that that has any bearing on this matter.  

As you suggest, I reckon that someone was "being nice" in paying her a day early, but that has had repercussions in that the date of payment for her (and thousands of others) was outside the effective date.   

We are talking about income received in the year ended 31st Dec 2008. Payments made during 2008, imho, cannot be construed as being made in 2009, even if it ought to have been paid on or after Jan 1st 2009.  

I don't think many would complain if the salary, due to be paid on Jan 1st was, due to the bank holiday, paid on Jan 2nd.  That didn't happen and the consequences are far more than was intended.


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## gipimann (7 Jan 2009)

I was paid on Dec 31st (in lieu of Jan 1st) as well, and the Income Levy was deducted.   The pay period was 02 (fortnightly pay), and all yearly totals (paid to date, tax deducted, tax credits, etc) were set to zero on the payslip.  As Towger said, it was just an administrative exercise to faciilitate staff by paying them earlier rather than later.


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## Marathon Man (7 Jan 2009)

gipimann said:


> As Towger said, it was just an administrative exercise to faciilitate staff by paying them earlier rather than later.


 
Agreed. But.......... administrative exercise or not, payment was made in 2008, so levy should not have been applied. Obviously early payment was not intended to avoid any legitimate deductions but only deductions in force on date of payment can be applied. Our tax returns don't refer to "year Ending on or about Dec 31st" - Form 12 is for "RETURN OF INCOME, CHARGES AND CAPITAL GAINS FOR THE YEAR ENDED 31 DECEMBER 2008"

This is a one-off event, and I might be splitting hairs on this, but you cant have deductions from one year being applied in a previous year.


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## Towger (7 Jan 2009)

The problem is the employer was trying to do a favor by paying on the 31st.
If they used the date of the 31st to calculate the wages she would have a Fortnight 27 in 2008.

Problem 1:
This results in her getting 2 extra weeks of PAYE and PRSI allowances she is 'not' due. Revenue allow 53 weeks of allowances ("but reserve the rights to look for a refund"), but not 54 weeks. Note: Their computer systems will allow 56 'insurable weeks' for a 4 Weekly period 14. But when they recalculate her correct tax they will only give 53 Weeks of allowances, as her P35L/P60 will have the 'Week 53' box 'Ticked'. Depending on the amount of tax she has 'underpaid' they may let it sit, but if you look for a tax back for; medical expenses or bin charges or fill in Form 11 / 12. They will balance one off against the other and if any look for the difference off you. 

Problem 2:
The next pay date she is due is the 15th, this is Period 2. Unless there is manual intervention she will lose on Period's 1 PRSI Free Allowance, but get two periods of PAYE Allowance. Or the pay date will be moved to the 14.. more messing..

Problem 3:
Assuming a pay date of the 15th, the payroll will reach the end of 2009 and only 50 Insurable Weeks will be given. This will result in: A. No refund on over deductions of Income Levy being paid back or B. Manual bodging of the Payroll to give 2 extra Insurable Weeks or C. Another Week 53/Fortnight 27 being run.

Problem 4
Problem 1 + 3C = Increased lightly hood of her employer (the Dept of Education ?) being audited as two 'Week 53's being run a row.


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## Marathon Man (7 Jan 2009)

Towger,
Just checked the payslip.  Period is "200902" and the dates of payroll period are "16-DEC-08 29-DEC 08", "date of issue 01-Jan-09".  The previous payslip was 200852.  So to include the relevent two weeks as 2008 would mean having 54 weeks in the year, which I accept is probably unacceptable to the revenue.  

However no favours were being done.  The pay period in question lies entirely in 2008 and payment was made during 2008, consequently the levy is not deductable.  

Looking back over previous years payslips, it appears that only 26 week two pay periods have been allowed per annum, hence 5 days are lost every 4 years. I don't know when the present Dept of Ed payroll system was set up but I reckon that the system has been losing days all along.  Until this year, period 02 has ended in Jan (2005 = Jan 3rd, 2006 Jan 2nd, 2007=Jan 1st, 2008 = Dec 29th).  This year Period 52 will end on Dec 15th.  

How the employer manages the payroll is their problem but they are not entitled to make deductions that do not yet apply (at time of payment) just because the particular payroll system won't handle a problem that should have been foreseeable.  

I reckon that this is a payroll mess that will have to be sorted out sooner or later.  (in 2020, week 52 will end on Nov 30th!! (OK...I had little better to do than work that one out...sad case...must get out more)) In the meantime the income levy has been applied incorrectly to teachers and probably nurses, gardai etc.


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## Towger (7 Jan 2009)

The fun is continuing... I have since learned that the legal eagles and tax experts in a number of companies who pay large bonuses (yes 6+ figure bonuses still exist) have gone through the legal small print, and they have concluded that even thought they are being paid this year, the bonus money is levy exempt. Plus, if Revenue object, they are more than prepared to run them through the courts. 

It looks as if Revenue should add their standard disclaimer to the bottom of their Income Levy FAQ 



> This Guide has been compiled by Revenue for employers.
> It has no legal force and does not purport to be a
> legal interpretation of the statutory provisions relating to
> the operation of Pay As You Earn.


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## Marathon Man (8 Jan 2009)

Just got off the phone to the Revenue. Apparently they've received loads of queries regarding the levy but haven't yet set up a refunds section for it - won't happen until later in the year.

As regards my wife's issue, the Revenue say, as I thought all along, that the levy is NOT payable if you received your payment prior to Jan 1st.  

I think we're going to have fun getting the money back from the Dept of Ed.  Alternatively we can wait until year end but will have to demonstrate the matter via payslip and bank lodgement details.  Lots of hassle, but there are thousands of others in the same boat.


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## Towger (8 Jan 2009)

I would chase them for it. Remember to keep record of when and who you talk to.


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## dewdrop (9 Jan 2009)

I understand medical card holders are exempt from the income levy. I assume i should tell my pension people of this. Just wondering if pensioners are aware of thi s or are they assuming they will be automatically exempt if over 70??


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