I
ISBN
Guest
A friend of mine is paid commission in his job. If he opts to have this paid each month will he pay overall less tax than if he gets it paid to him every three months for example? Or is there a difference at all?
D
daltonr
Guest
I can't see how it would make a difference.
If he get's a basic wage each month, and get's his commission each month, then he'll pay income tax on the combined amount each month.
If he defers receiving his commission, he'll also defer paying the tax on it, but in the month where he get's the commission, he'll still pay tax on the full amount. (Just all in one go instead of in three monthly hits.)
All other things being equal it's always better to get your hands on money as soon as possible, because you have the opportunity to use it earlier.
I'm trying to think of some arrangement whereby deferring commission to every 3 months might reduce/increase PAYE or PRSI, but I can't see any way it could.
I'd take it monthly. But hang on for one of the accountants to confirm that, or tell him to give an accountant a call. This would be a simple enough question to answer.
-Rd
If he get's a basic wage each month, and get's his commission each month, then he'll pay income tax on the combined amount each month.
If he defers receiving his commission, he'll also defer paying the tax on it, but in the month where he get's the commission, he'll still pay tax on the full amount. (Just all in one go instead of in three monthly hits.)
All other things being equal it's always better to get your hands on money as soon as possible, because you have the opportunity to use it earlier.
I'm trying to think of some arrangement whereby deferring commission to every 3 months might reduce/increase PAYE or PRSI, but I can't see any way it could.
I'd take it monthly. But hang on for one of the accountants to confirm that, or tell him to give an accountant a call. This would be a simple enough question to answer.
-Rd
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ISBN
Guest
Great, thanks for your help Rd 
W
WizardDr
Guest
Its the PRSI angle is what he should look at..the 'ole stealth tax.
Depending on the weekly amount, he might pay no employee PRSI (I think its €287 pw) and if this is paid in one go, then the prsi is 8.5% for employee.
Depending on the weekly amount, he might pay no employee PRSI (I think its €287 pw) and if this is paid in one go, then the prsi is 8.5% for employee.
D
daltonr
Guest
I think if there is any difference then getting the commission monthly rather that defering it is likely to reduce rather than increase any tax liability.
And yes, PRSI is the one to watch. I can't figure it out. It's hard enough to work out for someone getting a regular salary at regular intervals.
Getting paid monthly with a three monthly commission would make my head explode if I tried to work out the PRSI implications.
Tell him to go monthly.
-Rd
And yes, PRSI is the one to watch. I can't figure it out. It's hard enough to work out for someone getting a regular salary at regular intervals.
Getting paid monthly with a three monthly commission would make my head explode if I tried to work out the PRSI implications.
Tell him to go monthly.
-Rd
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ISBN
Guest
Thanks for your help WizardDr and RD, I'll pass the good advice on!
O
Obi Wan Kenobi
Guest
All depends what the basic salary amount is - there may be an advantage to taking the commission quarterly if the basic salary is below the health levy cutoff of EUR400(from next January)