Dirt tax on Sterling Account.

[niallck]

I opened a sterling Fixed Term account in NI last November.The interest will be due at the end of November, so must I declare this account to the Revenue in Ireland even though the interest will only be paid at the end of the month, well after the end of October deadline. I am resident in Ireland.

 

[smeharg]

Opening a foreign bank account makes you a "chargeable person" for self-assessment purposes. That means you must file an income tax return (form 11) in the year the account is opened and provide details of the account.

You'll be taxed on any interest received in the year at DIRT rates, however if the return is late you'll be taxed at income tax rates.

So although you didn't recieve any interest from the account in 2011 you still need to file a return.

 

[Slim]

Opening a foreign bank account makes you a "chargeable person" for self-assessment purposes. That means you must file an income tax return (form 11) in the year the account is opened and provide details of the account.

You'll be taxed on any interest received in the year at DIRT rates, however if the return is late you'll be taxed at income tax rates.

So although you didn't recieve any interest from the account in 2011 you still need to file a return.

If the interest is paid in Nov 12, is the return time enough until Oct 13?

 

[niallck]

Thanks for the info.

 

[smeharg]

If the interest is paid in Nov 12, is the return time enough until Oct 13?

No.

A return must be made to notify Revenue that the account was opened in the year, regardless of whether or not any interest was received in the year.

 

[Slim]

No.

A return must be made to notify Revenue that the account was opened in the year, regardless of whether or not any interest was received in the year.

Thanks, can you clarify though? Account opened in Nov 09, interest due to be paid in Nov12. Missed obligation to notify Rev of opening as I thought you simply declare the interest on payment. My questions are:
(A) penalty for failing to declare opening of account? It's a relatively small amount and
(B) when does the interest have to be declared?

Thanks, S

 

[niallck]

I checked the situation out with Revenue, and they tell me that as the interest is due in 2012, I dont have to do anything till next year, when I have to fill form 11 declaring all interest received on every deposit account.

 

[smeharg]

Whoever you spoke to has got it wrong. Here's the relevant extracts from Revenue's notes for guidance. The full guidance notes are available here (the relevant section starts on page 29) http://www.revenue.ie/en/practitioner/law/notes-for-guidance/tca/part38.pdf

There's a lot in there about the financial institution's obligations, you need to sift through it to find the individual's obligations.

Irish residents themselves are obliged to report the opening of such accounts
on their annual returns of income. This obligation applies irrespective of whether the​

matter also falls to be reported by a financial institution or other agent.

In the case of the taxpayer, noncompliance
attracts the surcharge for late submission of returns under section 1084. The​

surcharge will apply for the year in which the undeclared account was opened.

There is an obligation on residents to include in their annual returns of income details of​

any foreign accounts opened by them

As PAYE taxpayers are not under an obligation to make mandatory returns of income
and may not be requested by an inspector to make one for a particular year, it is
provided that a resident is to be regarded as a chargeable person for the purposes of the
surcharge under section 1084 and the obligation to make automatic Self Assessment
returns under section 951 for any chargeable period in which he/she opens or causes to​

be opened a foreign account.

In addition, if you look at the relevant section of Form 11 for 2011 it clearly states:

316. Foreign Bank Accounts (S. 895) Give the following details for each foreign bank account opened in 2011

There is no section to provide details of accounts opened in previous years.

 

[niallck]

Thanks for the heads up. I'll have to read through the relevant details of all the implications of opening foreign accounts. The person in Revenue I spoke to was a bit vague about the issue.I'll have to go back to clarify the situation!

 

[Slim]

How much might a surcharge be?

 

[smeharg]

How much might a surcharge be?

There's a surchage on late income tax returns of 5% of the tax liability if filed within 2 months of the original deadline, and 10% thereafter.

There would also be interest on any unpaid tax.

 

[Slim]

There's a surchage on late income tax returns of 5% of the tax liability if filed within 2 months of the original deadline, and 10% thereafter.

There would also be interest on any unpaid tax.

...but the tax will be paid on time..it's just that the account was opened in 2009 and not notified in any tax form until the upcoming return.

 

[smeharg]

...but the tax will be paid on time..it's just that the account was opened in 2009 and not notified in any tax form until the upcoming return.

Well, if you've no income other than PAYE then there's no surcharge, as there's no additional income upon which to charge tax and the surcharge. Similar applies to interest.

As highlighted above Form 11 does not have a section for declaring foreign bank accounts opened in previous years. So, technically a return would need to be filed for the year in which the account was opened, in your case 2009. Although, if you've no other self-assessed income in that year one would like to think Revenue would take a practical and pragmatic approach.

 

[Slim]

Cheers, here's hoping.