Leaving Work - last salary payment without tax

[ShaneyMac]

I'm leaving my present employment at the end of the month to take up a new job. The last time I changed jobs (over 5 years ago), I availed of a tax-free last months salary payment by getting the employer to basically pretend I was being made redundant and pay me a tax free lump sum equal to my last months wages. I have found some further information on this here -



Has anyone else done something similar, and if so, where can I find out more infomation on this than just the above link. The accountant in the current job needs a little convincing, though it all seems above board and is a win-win situation for both parties - employee doesn't pay tax on final pay cheque and Employer doesn't have to pay their tax contributions & PRSI etc.

Any thoughts greatly appreciated.

 

[jdork]

Highly dubious anyway but since you've already been made 'redundant' within the last 10 years it doesn't seem possible.

From the Osais link -
"Tax Free Entitlements

On a redundancy or retirement payment, you are entitled to the higher of the following which is then exempt from tax.

• Basic Exemption: The basic exemption due is 10,160 euro, plus 765 euro for each complete year of service
• The Basic Exemption plus the Increased Exemption: An additional 10,000 called the 'increased exemption' is also available in the following certain circumstances;

1. If you haven't received a tax-free lump sum in the last 10 years (my italics)"

 

[Past30Now]

I think (am almost certain) you can be made redundant more than once in ten years. The extra €10K only applies if you haven't been made redundant in the last ten years, but the statutory redundancy plus the basic exemption applies in the case of a genuine redundancy whether you've been made redundant previously or not.

In the case being described by shaneymac this is clearly fraud. Your company would not only forego paying the 10.75% employers PRSI, it would also be entitled to reclaim 60% of the statutory redundancy paid. Given that you've been with the company for five years they would be obliged to pay you a minimum redundancy of eleven weeks wages subject to a maximum of €600 per week. They would be risking an inspection of their records by the dept of enterprise trade and employment, which would confirm exactly how much they paid you, whether or not they replaced you. I don't know what the penalties are for this type of offence, but I would imagine they are quite severe, and I hope the accountant in your office has the good sense to politely decline your request.


Regards,


Past30