# Is additional tax due on deposit account.



## col (20 Oct 2006)

Tried to find a thread that deals with this but could not find a definitive answer. I sold my house a few years ago and put my money on deposit for twelve months as my new house was built. I paid 20% Dirt (almost 6K)during 2005 on this deposit account. Now my accountant is saying that deposit accounts are also subject to additional tax of 3% (PRSI) and a 2% (health levy) . I always understood that DIRT was the end of the tax liability on deposit accounts but he says no that in effect the overall tax rate on deposit accounts is 25% -20% DIRT, 3% PRSI and 2% Health levy.
Is this correct.


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## JQ2002 (20 Oct 2006)

I don't see how, PRSI/Health Levy is paid on your income. I've money on deposit and when setting it up I gave across my PPS number so that bank deducts that tax on my behalf. I don't expect there to be a further tax charge.


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## asdfg (20 Oct 2006)

Are you self employed? 

As self employed surely a private transaction house sale can be excluded from your records? Not a tax expert so don't know? 

Ask him where he is getting his info from? I had a quick look here but can't find any reference to DIRT


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## MugsGame (20 Oct 2006)

I've been wondering about this too, based on something [broken link removed] have started saying recently:


> You do not at present have to pay other Irish income tax on the interest, but you may be subject to PRSI/Health levy.



If your gross income is over the annual PRSI income threshold (€46,600 in 2006, less in 2005), Health Levy is the only thing that might be due.


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## MugsGame (20 Oct 2006)

Something similar came up before. See taxation of coupon interest.


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## col (20 Oct 2006)

I am self employed but I dont think this makes any differance. Got further advise this morning and it appears we are all subject to the prsi and health levy tax on deposit accounts even though we have paid dirt. Perhaps there is a threshhold before the additional tax kicks in and I happen to be above it.


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## liteweight (20 Oct 2006)

I think it's all deemed 'earned income' and therefore PRSI and Health Levy kick in. If you're a PAYE worker does this mean you have to declare interest on deposit? ROS has a section for it so it automatically deals with any PRSI issues.


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## MugsGame (20 Oct 2006)

Look at the thread I linked to -- bazermc says the Revenue say


> "There is no liability to PRSI where reckonable income is below €3,174".


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## extopia (21 Oct 2006)

If you have to file a tax return on Form 11 (not sure about Form 12) you must declare deposit interest and yes, it will be subject to PRSI and health levy. You can download the ROS offline application, fill out a return, and see for yourself.

AFAIK if you don't have to fill out a Form 11 or 12 I don't know how this is captured by revenue.


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## GeneralZod (21 Oct 2006)

It is on form 12 too. 

Last year I filled in my gross deposit interest but the revenue didn't bother collecting it "at this time". The balancing statement didn't say it was unpaid healthy levy, I'm just assuming that's what it was.


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## extopia (21 Oct 2006)

Are you not required to make a payment (if one is due) when returning your form 12?


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## Flush (21 Oct 2006)

I was in my local tax office the other day and enquired about declaring savings deposit interest and was told that it is taken into account as additional income for the year.
I was left with the impression that I would be paying the difference between the 20% dirt and the 42% top rate that i'm on??


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## jpd (21 Oct 2006)

from www.revenue.ie site



> Deposit Interest that has been subjected to DIRT is taxable under *Schedule D Case IV*. The DIRT deducted is deemed to cover the tax liability arising on this income in full irrespective of the marginal rate of Income Tax ordinarily paid by an individual. However individuals are still required to declare this type of income to Revenue.


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## ClubMan (21 Oct 2006)

Bear in mind _MugsGame's _quoted comment above about interest (or other non _PAYE _income) over c. €3K possibly causing one to become self assessed and requiring different treatment and maybe being also subect to _PRSI_.


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## extopia (21 Oct 2006)

Deposit income (at least from Irish sources, not sure how it works with international deposits) is never taxable at 42%. So if your tax office told you that they are flat out wrong.

When Revenue talk about tax liability, however, they are not including PRSI liability, as PRSI is not to my knowledge considered to be a tax (it's just some sort of compulsory insurance LOL).

If you fill out a tax return you will see that your PRSI bill increases when you declare your deposit interest.


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## extopia (22 Oct 2006)

I don't believe there is any special treatment for people whose deposit interest is less than €3,174. The significance of €3,174 is that it's the TOTAL INCOME threshold at which PRSI becomes payable for self-employed people. Or at least that was the figure for 2004.

From the Revenue website


____________________________
*PRSI for the self-employed*
People whose income is subject to PAYE income tax but who are held not to be insurable as employees continue to be insurable at Class S. However, where their reckonable income from all sources is less than €3,174 for year 2004, they will not be held to be insurable (see paragraph on Voluntary Contributions). In such cases, Class S should be applied during the year and contributors can apply for a refund of the PRSI paid during that year after the end of the tax year.


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## liteweight (22 Oct 2006)

What if you pay PAYE, are self employed part time, have deposit interest and use ROS? Does the system differentiate between what should be the lower rate on deposit interest or does it just lump all earnings in together?


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## extopia (22 Oct 2006)

Under ROS, deposit interest is taxed at 20%. It does this by increasing your 20% tax band by the amount of your gross deposit interest (for the purpose of tax computation), in order to avoid this marginal revenue being taxed at 42%.


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## GeneralZod (23 Oct 2006)

extopia said:


> Are you not required to make a payment (if one is due) when returning your form 12?



Just rang them to check this and they said just fill out the form
and they'll look at it and then send out a demand for any payment due or adjust my tax credits.


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## liteweight (23 Oct 2006)

extopia said:


> Under ROS, deposit interest is taxed at 20%. It does this by increasing your 20% tax band by the amount of your gross deposit interest (for the purpose of tax computation), in order to avoid this marginal revenue being taxed at 42%.



Great. Thanks!


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## GeneralZod (18 Nov 2006)

I got my P21 for 2005 back last week. The form showed that the gross interest was taxed at 20% and a compensating credit for the DIRT tax (also at 20%) was added. 

So the nett income tax due on the deposit interest was zero.

There's no mention of PRSI/Health levy. Do they recover this from PAYE income by adjusting PRSI exemption thresholds?


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## extopia (18 Nov 2006)

GeneralZod said:


> I got my P21 for 2005 back last week. The form showed that the gross interest was taxed at 20% and a compensating credit for the DIRT tax (also at 20%) was added.
> 
> So the nett income tax due on the deposit interest was zero.



See my post above.


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## GeneralZod (18 Nov 2006)

extopia said:


> See my post above.



Yes I saw it. 

I posted since in my recent experience it does seem to be that way in practice.

Apologies for doubting on an issue where there's so much confusion.


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## real_magoo (23 Nov 2006)

Form 12 also askes about gross interest on SSIA account(S). So is additional tax/prsi due on this (in addition to 23% deduced by bank on maturity).

Not sure why you have to declare interest in deposit and ssia accounts if no further tax is due?

Aslo do you have to declare interest on ssia interest in the years before maturity?


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## Protocol (23 Nov 2006)

Be careful, I think Form 12 asks about interest on SSA accounts, not SSIA accounts.


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