Salary Sacrifices

The Revenue Commissioners have always taken a hawkish stance on salary sacrifices, albeit often predicated on rather questionable assumptions. They have recently succeeded in bringing on to the statute book potentially far-reaching provisions designed to reflect their approach in practice. This article analyses these new measures and suggests that their effects do not always coincide with the Revenue’s description of them.

The term ‘salary sacrifice’, as the name suggests, typically denotes an arrangement under which an employee gives up part, or all, of their future cash remuneration in exchange for an alternative form of reward. Where the salary sacrifice is fiscally motivated, the alternative reward will usually take the form of what is hoped to be a tax-efficient benefit-inkind. The crucial issue for the Courts has been whether or not the arrangement eliminated the remuneration in question from the general Schedule E charge under TCA 1997 s112 or its equivalent.

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