Salary Foregone - BIK

[asdfg]

In our organisation we are able to purchase shares by salary foregoing.

The amounts are deducted over a number of months

We now have to pay BIK on this @ 12%pa on the reducing balance each month.

Is this correct.

If so can you point me to a source - e.g revenue site

 

[ClubMan]

Is this an ESPP (Employee Share Purchase Plan) or a SAYE (Save As You Earn) scheme or something? Revenue approved or not? What are you being charged tax on - the money saved or on any discount on the share price compared to market value? Are you initially avoiding tax/PRSI on the salary foregone and then being charged BIK? How exactly is the salary deduction done via payroll (e.g. is your gross on your payslip reduced by the salary foregone)?

For what it's worth my employer initially and mistakenly applied BIK tax and PRSI deductions via payroll on ESPP share price discounts until I pointed out to the that this was incorrect, that only tax applied and that this was dealt with on a self assessed basis by the employee via a [broken link removed]. Not sure if that's relevant in this case?

[broken link removed]e is a good summary of the BIK rules in force these days.

 

[asdfg]

It is a revenue approved share participation scheme.

We are taxed on amount of the salary foregoing at 12% p a on the reducing balance at the end of each month

Lets say the salary foregoing is 1000 and deducted from salary over say 4 months

250 is deducted per month

BIK calc as follows
1000 @ 12 % /12 = 10
750 @ 12 % /12 = 7.50
500 @ 12 % /12 = 5.00
250 @ 12 % /12 = 2.50

I can ask for the salary to be deducted in the first month but as the shares are purchased before the salary foregone is deducted I am still liable for BIK in the first month even though the shares were only purchased a week prior to deduction from salary.

I do not have any problem paying this, but am wordering if this is the correct treatment.