DIRT & PRSI on Savings Accounts

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Greekwife

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Is it correct that at the moment a PAYE worker with no other income apart from Deposit Interest and the PAYE does not have to pay PRSI on the Interest earned ? DIRT is the only Tax / Levy ?

Have read that the Govt will extend PRSI to Deposit Interest from 1/1/13. If this is the case then does that PAYE worker now have to inform Revenue and file a Tax Return and pay PRSI on the interest earned ?

If you were not working or receiving jobseekers (ie Stay-at-home Parent) but had Savings Accounts - how would that work re Interest earned and PRSI?

What would be the position with Children's Savings Accounts ?
 
Is it correct that at the moment a PAYE worker with no other income apart from Deposit Interest and the PAYE does not have to pay PRSI on the Interest earned ? DIRT is the only Tax / Levy ? ( Correct )

Have read that the Govt will extend PRSI to Deposit Interest from 1/1/13. If this is the case then does that PAYE worker now have to inform Revenue and file a Tax Return and pay PRSI on the interest earned ? ( Yes IF it happens )

If you don't work and get interest over I think €3200 annually then you are subject to completion of form 12 now, If they implement what I believe is an horrendous suggestion then you will be hit hard as will all depositors, my 2 cents says if it happens there will be a flight of capital outside the state, some of that will be declared, most in my opinion will not, it is a high risk strategy for this Government, too high.

Childrens savings account will have to fall into the same horrific terms and conditions IF implemented.
 
Greekwife said:
Is it correct that at the moment a PAYE worker with no other income apart from Deposit Interest and the PAYE does not have to pay PRSI on the Interest earned ? DIRT is the only Tax / Levy ?
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Normally correct that DIRT is the only tax but it depends.

Deposit income gets DIRT deducted at source THEN
You declare the deposit interest with the Revenue THEN
The Revenue give you a tax credit for DIRT already paid meaning you dont pay again BUT
The Revenue can only give you a tax credit if you have other income to cover the tax credit HENCE
Most people will only pay DIRT but a small minority of people with very little other income will pay the marginal rate of tax.

Greekwife said:
Have read that the Govt will extend PRSI to Deposit Interest from 1/1/13. If this is the case then does that PAYE worker now have to inform Revenue and file a Tax Return and pay PRSI on the interest earned ?
Click to expand...

There is a proposal to put PRSI on dividend income and rental income. I would be surprised if the government put PRSI on deposit income due to the broad spectrum of people who earn deposit income.
 
This thread should be merged with the adjoining one on the same subject - DIRT/PRSI/Revenue .

Not much point discussing it in detail until Wednesday afternoon. Anyway, Mr Noonan assured me that there is no chance that he'd be stupid enough to add PRSI to every DIRTED account as it would mean, on the increasingly present crappy interest rates of 2-3%, he'd be taking ca. 40%. Why save?

And certainly -even if he was crazy enough to add PRSI- he wouldn't expect PAYE workers to fill out Revenue forms every time they got their DIRTED ten euros worth. Far too much paperwork for savers and officials.

Noonan agrees with Palerider that it would be all too horrendous.
 
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CiaranT said:
There is a proposal to put PRSI on dividend income and rental income. I would be surprised if the government put PRSI on deposit income due to the broad spectrum of people who earn deposit income.
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Had read about Dividend and Rental Income but in some commentary Deposit Interest was also included.

Hopefully Deposit Interest won't be included.
 
Yes, Mandelbrot said deposit interest would be included. He is never wrong but I still can't believe it. As a "Greek wife" you'd understand me calling this decision complete malakias.
 
oldnick said:
This thread should be merged with the adjoining one on the same subject - DIRT/PRSI/Revenue .

Not much point discussing it in detail until Wednesday afternoon. Anyway, Mr Noonan assured me that there is no chance that he'd be stupid enough to add PRSI to every DIRTED account as it would mean, on the increasingly present crappy interest rates of 2-3%, he'd be taking ca. 40%. Why save?
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Maybe that's the point, in a recession there is an argument to be made for discouraging savings in order to stimulate consumer spending.
 
In Nov 2011 Joan Burton said in a speech to the Chartered Accountants Ireland Cork Society

"Another measure I am considering is widening the net to make certain types of unearned income such as rent profits and dividends liable to PRSI. This was recommended by the Commission on Taxation in 2009, but it was not acted upon by the previous government"

http://www.welfare.ie/EN/Press/Speeches/2011/Pages/sp251111.aspx

The Commission on Taxation Report, 2009 states "Employees should be subject to PRSI on unearned income such as Investment Income and Rental Income"



Revenue says the following in relation to Investment Income:-

"Investment income arising in the state that has not been taxed at source (i.e. Interest received without deduction of DIRT, Credit Union Dividends, etc.) is taxable under Schedule D Case III. If you have a PAYE source of income and the total amount of income received in these categories plus any other non PAYE income does not exceed €3,175, the tax due on this income can be collected by means of an adjustment to your Tax Credit Certificate. If the income exceeds this limit you are required to register for Self Assessment."

http://www.revenue.ie/en/tax/it/investment-income-arising-state.html

In the 2012 Budget speech Michael Noonan referred to "Further broadening of the base for PRSI to cover rental, investment and other forms of income from 2013"

http://budget.gov.ie/budgets/2012/FinancialStatement.aspx

On Oct 16th 2012 Labour Party TD Kevin Humphries submitted the following questions (among others) to Joan Burton

" if she has considered extending PRSI on to all unearned investment income such as income from rental property, dividends, other investments and deposit interest for employees; if she will consider having it deducted at source where applicable such as from the issuing company or bank; the projected yield from such a widening of the PRSI base; and if she will make a statement on the matter. [44623/12]"

and

"the yield on an annual basis from 2007 to 2011 from PRSI on deposit interest income; the expected yield in 2012; the increased projected yield on an annual basis if PRSI was extended to deposit interest income from both self employed and PAYE workers; if she will consider introducing a withholding of PRSI at source before disbursement of interest on such personal accounts as applies to DIRT; and if she will make a statement on the matter. [44625/12]"

and Joan Burton replied

"All workers pay PRSI on their earnings from employment. If an employee has earned income from self-employment, PRSI as a self-employed contributor is also payable on the profits from that self-employed activity as well as from any other unearned income the individual may have. Similarly a self-employed contributor (who is not an employee) pays PRSI on both earned and unearned income. However if an employee has unearned income only, there is no PRSI charge on the unearned income. Unearned income includes rental and investment income as well as income from dividends, deposits and savings and from overseas investments.

It is difficult to estimate the projected annual yield if PRSI was extended to all sources of unearned income including income from rental property, dividends, other investments and deposit interest for both self-employed and PAYE workers who currently may not be liable to pay PRSI on these streams of income. Based on 2009 data it is estimated that the additional yield could be in the region of €20m, of which a substantial part refers to rental income.

The Revenue Commissioners act as the Department of Social Protection’s agent in the collection of PRSI. Any proposal to deduct at source or withhold PRSI to be charged on streams of income which are currently exempt from PRSI would have to be discussed with the Commissioners to determine the viability of that mechanism of collection.

It is not possible to furnish the annual yield from 2007 to 2011 and the projected yield in 2012, in respect of various categories of unearned income including rental income, dividend income and deposit interest income, as this information is not disaggregated from Class S income generally.

One of my key goals in the Department is to reform the system of social protection to put it on a sounder financial footing in the future. One of the matters I am most concerned about is the deficit in the Social Insurance Fund. It is my intention to widen the PRSI income base to make certain types of unearned income, such as those outlined above, liable to PRSI. Any proposal to bring additional sources of income within the base on which PRSI is charged would have to be considered taking account of all of the implications, including the potential for providing access to additional social insurance entitlements."

http://oireachtasdebates.oireachtas...pack.nsf/takes/dail2012101600065?opendocument

Some commentary has taken the PRSI extension for PAYE workers to mean Income from Rental Income & Dividends only therefore meaning only PAYE workers who are obliged to file a Form 12 anyway.
 
Think it is from tonight.

Also think deposit interest is now subject to PRSI.

An Post Savings is your only man.

Invested there this morning.
 
Mr Noonan said he was increasing the DIRT tax on deposits by 3 per cent to 33 per cent, decreasing the threshold at which Capital Acquisitions Tax applies by 10 per cent and increasing the rates of Capital Acquisitions Tax and Capital Gains Tax by 3 per cent to 33 per cent from midnight tonight.
 
mcriot29 said:
He said from tonight just rang anpost , they say no prsi on there savings certs etc
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Quick response from An Post. Surprised that they know that already.

PRSI is now on all unearned income. Surely that includes deposit interest from State Savings? or is it a nominated exemption?
 
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