I've just noticed this and wonder why the usual extra tax of 21% doesn't apply as it does to those paying tax at the highter rate; can anyone explain? Or can it be because the account is limited to savings of €300/month and only guarantees 6.6% for one year? AFAIK Credit Union Special Saving/Share Accounts are similarly treated when annual interest is less than ~ €4-500 p.a.
Why only DIRT tax on AIB Regular Saver Account?
- Thread starter sherib
- Start date
The reason is that when banks (all banks) deduct DIRT tax on interest it is in full settlement of any tax liability i.e no further income tax is required. It is outlined on Revenue.ie, that DIRT deducted is said to satisfy your full tax liability, it is not the same for Dividends where 20% tax deducted on these there is the additional comp of 21% if you fall into this bracket.
That's great news - are you absolutely certain? I'd be very grateful if you could post the link to Revenue where this is stated since I was about to return interest from C.U. and INBS and pay the extra 22%.
The only savings accounts I have are ones where DIRT is always deducted. What I'm wondering now is - do I have to declare on Tax Return Form 12 any interest received (from savings on which full tax was paid and stating that DIRT was deducted)? I am truly allergic to forms so would it be wrong just to ignore that question and save myself the bother of form filling? In other words would it be wrong just to ignore that question?
DIRT of 20% deducted at source is definitely the full extent of one's tax liability on interest in most cases regardless of one's marginal income tax rate. See [broken link removed]:
CU share/deposit accounts vary in their tax treatment. Some are exempt from tax on interest up to certain limits. Some have DIRT of 20% deducted at source. Others have no tax deducted and the holder is liable for self declaration and payment of income tax on the interest/dividend payments. See [broken link removed]. If the INBS account was a deposit account with DIRT deducted at source then you should have no further liability.
If the Form 12 asks for details if deposits and interest then you must return it even if there is no further liability on them.
If the question is asked then you must answer it or run the risk of filing an incomplete/erroneous return.
Did you read the full CU guide to taxation? It describes the different tax treatments of different CU deposit and share accounts. You need to find out from your CU what type(s) you hold and what tax implications there may be. It's impossible for anybody to second guess your details and liabilities here on AAM.
Yes I did and have confirmed that my (small) CU A/c is a Special Share Account on which the CU deducts DIRT and was advised there is no further tax liability. In fact I was also told by my CU that the majority of their savings accounts are of this type.
It doesn't seem that any DIRT deducted interest needs to be declared on Form 12 in view of this Revenue link (for which many thanks):
Now I don't know whether or not to declare such interest on Form 12
.I think that may be because (if I recall correctly) the default, when the new CU account taxation regime came into force a while back, was for existing share accounts to be converted into special share accounts unless the account holder told the CU otherwise. This meant that DIRT at 20% was deducted at source rather than the account holder being liable for self declared/paid income tax on the returns.
I'm self employed and was charged PRSI on my deposit interest (after DIRT) last year. I'd never heard of this but after doing the forms in ROS I noticed what I thought was a "bug". Apparently not and I was taxed again on my interest!
Goes to show that you should fill all the boxes though...