# DIRT & PRSI on Savings Accounts



## Greekwife

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 ?


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## Palerider

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.


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## Lightning

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 ?



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 ?



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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## oldnick

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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## Greekwife

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.



Had read about Dividend and Rental Income but in some commentary Deposit Interest was also included.

Hopefully Deposit Interest won't be included.


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## oldnick

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.


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## dam099

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?



Maybe that's the point, in a recession there is an argument to be made for discouraging savings in order to stimulate consumer spending.


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## Greekwife

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.


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## Greekwife

Seems like it is going to happen to Deposit Interest but from 2014.


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## mcriot29

Is dirt going up from midnight tonight


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## Daddy

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.


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## STEINER

mcriot29 said:


> Is dirt going up from midnight tonight



I thought thats what he said.  Not sure though.


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## mcriot29

Daddy anpost will be subject to prsi too


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## Daddy

An post is tax free surely.

Are you certain on that PRSI deduction.


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## mandelbrot

mcriot29 said:


> Daddy anpost will be subject to prsi too


 
How do you figure that? An Post savings bonds that are free from income tax will presumably also be free from PRSI, unless you've seen something that suggests otherwise...?


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## Lightning

mcriot29 said:


> Is dirt going up from midnight tonight



Surely from 1 January 2013?


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## mcriot29

He said from tonight just rang anpost , they say no prsi on there savings certs etc


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## Lightning

Very surprised that DIRT is from tonight. It will hit all the year end interest payments.


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## mcriot29

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.


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## Lightning

mcriot29 said:


> He said from tonight just rang anpost , they say no prsi on there savings certs etc



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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## mcriot29

He said there tax free, is the prsi in from 2013 or 14


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## Lightning

mcriot29 said:


> 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.



Does he not mean Capital acquisitions tax and capital gains tax to rise to 33% from midnight but DIRT from 1 January 2013?


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## Daddy

If An Post State Savings exempt there will be a massive shift of monies to the State Savings.

Never heard the interest you get from An Post state savings as being referrd to as deposit interest - although it is such.  d'ont think the literature on bonds/certs state 'deposit interest'. 

Maybe that's what their hoping for -they want our money bad !.


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## Daddy

PRSI def applies from 1/1/14 but whether or not to An Post is the only question.


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## mandelbrot

Lads, this is not complicated - certain State savings are not seen as income and hence are exempt from income tax.

Since they aren't "income" they aren't reckonable for PRSI either, unless they specifically write it into the legislation, which you'd have to assume isn't happening or he would have said they're doing it.


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## mcriot29

What about the anpost 10 year bond 40percent bonus is that the same


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## Daddy

Sure hope your right Mandlebrat.

If so just watch the money pour into the state coffers.


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## sebadoh

Surely saving certs and bonds are the same as Government gilts and bonds and therefore completely exempt from taxation


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## Lightning

Thanks mandelbrot. 



sebadoh said:


> Surely saving certs and bonds are the same as Government gilts and bonds and therefore completely exempt from taxation



Except for the solidarity 10 year bond which is part subject to DIRT.


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## Daddy

So deposit interest is subject to 33% tax from midnight and PRSI from 1/1/14.

So what is that in total to be taken from the ordinary depositor - is it over 40% by 1/1/14.

Sure if An Post bonds/certs are tax free like Govt bonds full stop then An Post will see a wall of money hit it.


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## mcriot29

Yes but the 10 year bond only has 10 percent subject to dirt , what about the 40 percent bonus


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## mandelbrot

mcriot29 said:


> What about the anpost 10 year bond 40percent bonus is that the same


 
I can't make it any clearer than I did above...! Is the bonus exempt from income tax, and therefore (and the next word in bold is a big hint) *NOT* income...


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## Lightning

Noonans full speech is here. 

There was a pause in between Capital Acquisitions Tax and DIRT. Hence, it might only be Capital Acquisitions Tax that goes up tonight. 



> Capital Taxes
> 
> 
> 
> A  key element of this Budget has been to ensure fairness. In that  context, I am introducing a number of measures in the area of capital  taxes to ensure that people with wealth make a fair contribution to the  State. These include:
> 
> 
> 
> Decreasing the threshold at which Capital Acquisitions Tax applies by 10 per cent.
> 
> 
> 
> Increasing DIRT from 30 per cent to 33 per cent.
> 
> 
> 
> Increasing the rates of Capital Acquisitions Tax and Capital Gains Tax by 3 per cent to 33 per cent from midnight tonight.


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## theresa1

If it is midnight tonight for the DIRT then still time to phone AIB Direct for example and only get hit with the 30%.


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## Greekwife

The PRSI change for Deposit Income is from 2014

Taken from the Minister's Speech:

"Minister Burton will also bring forward legislation to change PRSI contributions as follows:

Where modified PRSI rate payers have income from a trade or profession, such income and any unearned income they have will be made subject to PRSI with effect from the 1st of January 2013.
Unearned income for everyone else will become subject to PRSI in 2014. This means that PRSI will be payable on income generated from wealth such as rental income, investment income, dividends and interest on deposits and savings."

http://budget.gov.ie/budgets/2013/FinancialStatement.aspx#section10


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## Greekwife

DIRT is going up from 01/01/2013

http://budget.gov.ie/budgets/2013/Documents/Summary of 2013 Budget Measures Policy Changes.pdf

Scroll down to TAX on SAVINGS


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## Daddy

Very helpful Greekwife thanks for confirmation.


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## Greekwife

So what is the best Option for us ?

My husband is a PAYE worker.  I am a Stay-at-Home Parent.  He pays PRSI.  We are assessed jointly for Tax purposes.  He gets my Tax Credits and the Home Carer Tax Credit.  I have no income apart from Child Benefit (is that classed as income ?) of now €260 per month.

We have no other income and have no rental income, dividends etc.  But we do have Savings.  We each have some in our own name and some joint savings.  There is also some small amounts in Savings Account for each of the children.

So will he pay PRSI on the Deposit Interest earned on his Savings ?  As I don't pay PRSI (now) will I have to pay PRSI anyway on the Deposit Interest on my Savings ?  What about the Savings Accounts in our Joint Names ?  What about the Children's Acccounts ?

Would it be best to put all our Savings into my name ?  Or just get some An Post Savings Bonds or Certs ?

How will the PRSI be collected for people like us who do not need to file a Tax Return at the moment ? Or will it be deducted at source by the Bank ?


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## Lightning

Knew it would be from 1 January 2013.



Greekwife said:


> DIRT is going up from 01/01/2013
> 
> http://budget.gov.ie/budgets/2013/Documents/Summary of 2013 Budget Measures Policy Changes.pdf
> 
> Scroll down to TAX on SAVINGS



Full extract below. The other DIRT rate is now 36%. 



> Deposit Interest Retention Tax and Exit Taxes on
> Life Assurance Policies and Investment Funds
> The rate of retention tax that applies to deposit interest,
> together with the rates of exit tax that apply to life
> assurance policies and investment funds, are being
> increased by 3 percentage points and will now be 33% for
> payments made annually or more frequently and 36% for
> payments made less frequently than annually. The
> increased rates will apply to payments,* including deemed
> payments, made on or after 1 January 2013*.


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## Lightning

Greekwife said:


> How will the PRSI be collected for people like us who do not need to file a Tax Return at the moment ? Or will it be deducted at source by the Bank ?



Tax return. PRSI will not be at source.


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## MysticX

I'm guessing this would have to be deducted at source (is this even possible?).

This has to be considered:
-Nearly everyone has a savings account subject to DIRT if not multiple savings accounts i.e. old ones that they never bothered to close but may still be earning a few euros / cents in interest net of DIRT.
-The sheer diversity of the people who have savings accounts e.g. kids who have had savings account(s) opened for them by their parents to people who regularly save from their salary.
-The majority of the working force which are PAYE are fairly clueless regarding filing tax returns, most wouldn't even know where to begin or would be quite apprehensive about it.
-If everyone has to file a Form 12 for all their accounts which are subject to DIRT then I don't see how Revenue will be able to cope.

If it's going to work it will have to be straightforward, efficient and minimum effort required by those paying it (wasn't DIRT set up to be deducted at source otherwise people just weren't declaring it?). Otherwise this is going to turn into one huge mess.


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## Lightning

MysticX - I share your logistical concerns. The reality is that a lot of people will not declare deposit interest. The Revenue will only go after those with large deposit interest. They are not going to go chasing a kid who made a few quid in deposit interest. 



Daddy said:


> If An Post State Savings exempt there will be a massive shift of monies to the State Savings.



Completely agreed. However, the NTMA/DoF are under huge pressure from the banks to lower State Savings rates. I would think that some cuts in State Savings rates are on the way.


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## Daddy

Agree that reductions are on the way.    Filled my boots this over last weekend and again this morning.   Is it certain that prsi does not apply to certs and bonds.


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## The Ghoul

Re: PRSI on State Savings


			
				NTMA said:
			
		

> Interest earned on Savings Bonds is exempt from Deposit Interest Retention Tax, Income Tax and Capital Gains Tax in Ireland and is not returnable as income to the Revenue Commissioners.


 
From this it seems to me that State Savings interest could be subject to PRSI. PRSI is not mentioned in the list of exemptions in the above quote and is a social insurance payment to the Dept of Social Welfare rather than a tax payable to Revenue. Therefore I think that PRSI could be charged on State Savings interest and the above quote would remain valid.

Personally, I would be delighted if State Savings interest is not regarded as "income" as it could be very important for some of my relatives. Their State Savings (certs and bonds) interest puts them over the threshold for the over 70s medical card as of today. They have already moved some money to non interest bearing accounts and I have been asking on AAM whether moving money to prize bonds could help with the situation. My thinking is that maybe prize bond prizes do not count as "income" for the means test. I think this is clutching at straws though.
http://www.askaboutmoney.com/showthread.php?p=1302086


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## Lightning

Interesting quote especially "not returnable as income to the Revenue Commissioners" which I would think would suggest that it is not subject to PRSI. In 2014, surely, the Revenue will collate PRSI collection on unearned income as part of filled returns. 

Also, the list mentions "income tax", PRSI, like USC is especially an income tax.  

I asked a tax expert today about this. His take was also that State Savings income is normally 'untaxable income' and as such will not be subject to PRSI. 

So, most likely, State Savings now offer DIRT free rates, PRSI free rates and high interest rates. Now might be the right time to grab the long dated State Savings rates before the inevitable cuts to these rates come. If I was running a bank, I would be demanding that the NTMA cut rates immediately.


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## irbx

*state savings*

The current rate is 5.04% on the 5 year 6 months certs if was subject to Dirt @ 30%.

would the new rate be if prsi @ 7% and Dirt @ 33%  6.725% AER. It would be hard for banks to bet. I see a major tranfer of funds from banks to NTMA.


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## Greekwife

How much can a person earn (Post-Budget) before becoming liable for PRSI ?  And how does "Unearned Income" (Deposit Interest) fit into that ?

DIRT covers the Tax liability so just PRSI.


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## Boyd

CiaranT said:


> The other DIRT rate is now 36%.



Whats the difference between the two? Is it based on when the interest is paid out?


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## paulgreen

think i'll start spending my savings hardly worth keeping it on deposit anymore. 40% is the final straw for me this government have screwed me for the final time!


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## frankmac

Greekwife said:


> The PRSI change for Deposit Income is from 2014
> 
> Taken from the Minister's Speech:
> 
> "Minister Burton will also bring forward legislation to change PRSI contributions as follows:
> 
> Where modified PRSI rate payers have income from a trade or profession, such income and any unearned income they have will be made subject to PRSI with effect from the 1st of January 2013.
> Unearned income for everyone else will become subject to PRSI in 2014. This means that PRSI will be payable on income generated from wealth such as rental income, investment income, dividends and interest on deposits and savings."
> 
> http://budget.gov.ie/budgets/2013/FinancialStatement.aspx#section10


 
Is this basically saying that it applies to self-employed from 01/01/13 and to everyone else from 01/01/14?


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## Lightning

irbx said:


> The current rate is 5.04% on the 5 year 6 months certs if was subject to Dirt @ 30%.
> 
> would the new rate be if prsi @ 7% and Dirt @ 33%  6.725% AER. It would be hard for banks to bet. I see a major tranfer of funds from banks to NTMA.



PRSI could be zero, it could be 7%, it could be 10%. It varies.

It will be 2014 before we need to factor in PRSI for comparable grossed up rates  As PRSI rates vary depending on your income, it would be difficult to factor into grossed up rates. 

My first step is to confirm the new grossed up rate for the 10 year State Savings product for 2013.


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## Lightning

Greekwife said:


> How much can a person earn (Post-Budget) before becoming liable for PRSI ?  And how does "Unearned Income" (Deposit Interest) fit into that ?



It varies. The minimum threshold has not changed. 

Unearned income will be treated the same way as earned income.


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## Lightning

username123 said:


> Whats the difference between the two? Is it based on when the interest is paid out?



36% applies to any savings account that does not pay interest at least one a year. Very rare that this happens. Most term deposits, even over 1 year, pay interest at least once a year.


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## theresa1

http://www.independent.ie/national-...s-rises-to-37pc-in-double-whammy-3317459.html

"SAVERS are set to get clobbered with an effective hike in DIRT tax to 37pc."


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## seánieboy

let me get this right i am a public servant and i get paid weekly in which i pay my income tax, usc charge, prsi.  i also have an income from a foreign property that i get once a year of which i pay usc charge in income tax but not any prsi. 

so if i save money from my paye job in which prsi is already paid will i be charged prsi again on this money when its put on deposit.   

Now i can imagine that prsi could be chargeable towards my foreign property money would it be the case that the unearned income would be from this money alone??

and number 2 the money i have already in the bank is from years of saving from my p.a.y.e. job surely there not going to charge me prsi again on this money already in the bank . maybe someone can clarify this


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## jaykayphd

seánieboy said:


> let me get this right i am a public servant and i get paid weekly in which i pay my income tax, usc charge, prsi. i also have an income from a foreign property that i get once a year of which i pay usc charge in income tax but not any prsi.
> 
> so if i save money from my paye job in which prsi is already paid will i be charged prsi again on this money when its put on deposit.
> 
> Now i can imagine that prsi could be chargeable towards my foreign property money would it be the case that the unearned income would be from this money alone??
> 
> and number 2 the money i have already in the bank is from years of saving from my p.a.y.e. job surely there not going to charge me prsi again on this money already in the bank . maybe someone can clarify this


 
They will not be charging PRSI on the money you have in the bank, rather on the interest that money earns by having it on deposit in the bank.


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## mcriot29

So will the prsi be taking at source or how


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## ClubMan

CiaranT said:


> MysticX - I share your logistical concerns. The reality is that a lot of people will not declare deposit interest. The Revenue will only go after those with large deposit interest. They are not going to go chasing a kid who made a few quid in deposit interest.


We always had this wink and a nod approach to taxation of savings on the part of _Revenue_, institutions and individuals - _CU _shares/deposits being the main one up to recent years. Those who happened to fall into the self assessed category (and not necessarily self employed) had to stump up while others paid nothing even when they were liable.


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## TarfHead

seánieboy said:


> .. the money i have already in the bank is from years of saving from my p.a.y.e. job surely there not going to charge me prsi again on this money already in the bank . maybe someone can clarify this


 
Money in a deposit account is some residue of taxed iincome. Interest earned on this money has, for many years, been subject to tax (DIRT). Now they want to levy PRSI on the same interest earned.

The principle of a tax on money already taxed has been established for many years.

Though, with interest on demand deposits at 0.1%, or less, DIRT/PRSI payable will not amount to much for many.


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## wbbs

PRSI is an insurance you pay to provide you with benefits, right?  So if I get charged prsi on my deposit interest what benefits do I get?  Presumably this is not counted as a contribution for the purposes of going toward pension benefits for example assuming I have no other taxable source of income and not getting a prsi contribution any other way.


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## The Ghoul

wbbs said:


> PRSI is an insurance you pay to provide you with benefits, right? So if I get charged prsi on my deposit interest what benefits do I get? Presumably this is not counted as a contribution for the purposes of going toward pension benefits for example assuming I have no other taxable source of income and not getting a prsi contribution any other way.


That is a good question and I was thinking about it today. I would have presumed the opposite to you i.e. if you pay the social insurance charge on your income you would be entitled to the benefits. 

However as a PAYE worker with no investment income (other than deposit interest) and to whom Form 12s, Form 11s etc. are alien, I find this issue confusing. 

I would also be interested to see what happens for pre and post 1995 public servants. What rate of PRSI would the pre 95ers pay on their deposit interest, if it is full PRSI could they then become entitled to optical and dental benefit and get a contributory old age pension on top of their public service pension resulting in a combined pension of greater than half their final salary.

If, as speculated by several posters in this thread, PRSI will not be payable on States Savings interest, would a post 1995 public servant be better off with State Savings. They will receive no extra benefits from paying PRSI on deposit interest so they might as well put their savings into a product that is (possibly) PRSI exempt.


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## ClubMan

TarfHead said:


> Though, with interest on demand deposits at 0.1%, or less, DIRT/PRSI payable will not amount to much for many.


Not necessarily:

http://www.askaboutmoney.com/showthread.php?t=102329


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## The Ghoul

The more I read the more confused I get. I see a threshold figure of 3174 being mentioned. Let's say someone is a PAYE worker with no consultancy income, rental income, dividends etc. 

They do have a deposit account in an Irish bank and the gross deposit interest from it is above that threshold figure. Let's say the gross interest is 7000 and DIRT is deducted automatically from that. 

All their savings are in the bank, they have nothing in State Savings. 

What does the Budget change? Assuming PRSI is not taken at source, will they have to make a tax return and pay PRSI? Should they have been doing both of the above before now? Or should they have been making a tax return but not paying PRSI?


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## mandelbrot

The Ghoul said:


> The more I read the more confused I get. I see a threshold figure of 3174 being mentioned. Let's say someone is a PAYE worker with no consultancy income, rental income, dividends etc.
> 
> They do have a deposit account in an Irish bank and the gross deposit interest from it is above that threshold figure. Let's say the gross interest is 7000 and DIRT is deducted automatically from that.
> 
> All their savings are in the bank, they have nothing in State Savings.
> 
> What does the Budget change? Assuming PRSI is not taken at source, will they have to make a tax return and pay PRSI? Should they have been doing both of the above before now? Or should they have been making a tax return but not paying PRSI?


 
If their income from non-PAYE sources exceeds 3,174 then they are a chargeable person and should be filing a Form 11 and receiving a tax assessment annually.

If their Form 11 had a PAYE income source on it, then they would not have been liable to pay PRSI on the 7k of Deposit interest.

the change is that in the future they will pay 4% PRSI on that interest. They always should have been, and will continue to be, required to file a Form 11.


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## kdoc

Will joint accounts pose an administrative headache for revenue?


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## wbbs

I never knew that you had to file a return if your only income was for example 4k in deposit interest, I actually would have assumed that you couldn't possibly need to do anything as your income was actually so small and DIRT was being deducted.

As to my question re what benefits accrue to me from paying this pay related social insurance anyone know the answer?


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## The Ghoul

wbbs said:


> I never knew that you had to file a return if your only income was for example 4k in deposit interest, I actually would have assumed that you couldn't possibly need to do anything as your income was actually so small and DIRT was being deducted.


Thousands of others would have thought (and still think) the same as you. My understanding always was that you do not have to make a tax return if all your income is taxed at source. PAYE income and deposit interest are taxed at source. Most other forms of income are not taxed at source.

Here is what Grant Thornton's website says about it 
[broken link removed]



> A person is not required to file a tax return unless he/she falls within the definition of a “chargeable person”. Generally, a chargeable person is someone in receipt of trading or professional income or investment income, i.e. non-Schedule E income. Examples of investment income include rental income, dividends and deposit interest.


Looks like "someone" with deposit interest has to file a tax return in that case

But then in the next paragraph


> An individual in receipt of PAYE income only is a chargeable person if the individual:
> 
> - opens a foreign bank account;
> - acquires a foreign life policy;
> - acquires a material interest in an offshore fund; and
> - exercises share options.


Now if opening a Irish bank account and earning 3174 euro in interest resulted in a PAYE worker having to file a return, why don't they have this in their list. 

A similar pattern can be seen on other accountants' websites. Plenty of stuff about dividends, foreign income and some vague mentions of deposit interest - but a lack of definitive statements on the obligations of PAYE workers with deposit interest from Irish banks and no other sources of income. The most definitive statements on this are from mandelbrot on AAM.


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## mandelbrot

The Ghoul said:


> Now if opening a Irish bank account and earning 3174 euro in interest resulted in a PAYE worker having to file a return, why don't they have this in their list.
> 
> A similar pattern can be seen on other accountants' websites. Plenty of stuff about dividends, foreign income and some vague mentions of deposit interest - but a lack of definitive statements on the obligations of PAYE workers with deposit interest from Irish banks and no other sources of income. The most definitive statements on this are from mandelbrot on AAM.



OK forget Grant Thornton and take it straight from the horse's mouth:

[broken link removed]
Assessable non-PAYE income of €3,174 or more
An individual with assessable non-PAYE income of €3,174 or more for any year is regarded as a "chargeable person" for Self-Assessment and must file a Form 11 for that year.

In Grant Thornton's defence I think you're misreading that last bit you quoted - try putting a comma after "PAYE income only", which indicates that the paragraph specifically excludes anyone with deposit interest.


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## wbbs

I could read that last piece you quoted from revenue site and it wouldn't tell me in plain english that I had to make a return on the only source of income I had of 4k deposit interest, that might be clear to someone in the business but to the average person I don't think 'assessable non-paye income' would translate to deposit interest from which DIRT was paid.   

What hope has the ordinary person of knowing this, I wouldn't even have figured it out and I thought I knew how to fill my tax forms!


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## mandelbrot

I don't know what say to ya WBBS, if you drop the word assessable does it make it less confusing - "non-paye income"?! Assessable is just a verb, you get assessed to tax, the income assessed on your return is assessable income... I wouldn't have thought it requires explaining.


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## wbbs

That's because you know what it means, this is language familiar to you in your business I imagine.   I understand it of course, I just don't think it is that clear to the average person that your taxed deposit interest is part of it.


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## mandelbrot

How can it not be?
If I asked you "is deposit interest a form of income?" what would you say?
And I'm pretty sure everyone in the country knows what PAYE income is.
So I'm not sure how much clearer it couldbe, short of listing it. But if you start listing things, that's when the clever slippery fellows start trying to figure out what's not listed, or how to get around what's listed.

Anyway, what I quoted was from the tax briefing, aimed at tax professionals - is either of these sources more comprehensible to the layperson?:

http://www.revenue.ie/en/business/self-assessment.html
Self-Assessment gives you greater control and responsibility over your tax affairs. It applies for Income Tax purposes to:
Self-employed people (i.e. people carrying on their own business including farming, professions or vocations)
People receiving income from sources where some or all of the tax cannot be collected under the PAYE system, for example: profits from rents, investment income, foreign income and foreign pensions, maintenance payments to separated persons, fees, profit arising on exercising various Share Options/Share Incentives.

http://www.revenue.ie/en/tax/it/leaflets/it10.html#section1
Persons receiving income from sources where some or all of the tax cannot be collected under the PAYE system, for example:
profits from rents,
investment income,
foreign income and foreign pensions,
maintenance payments made to separated persons or where civil partnerships are dissolved,
fees and other income not subject to the PAYE system,
profit arising on exercising various Share Options/Share Incentives.


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## ShortTerm

Mandelbrot,

What then has changed with respect to deposit interest with the 2013 budget?  

Why was it announced that self employed would have to pay PRSI on deposit interest from 1/1/13 and people in the PAYE system have to pay from 1/1/14 if that was always the case?  (I'm not disputing that it was the case)

Is the change that it's going to be deducted at source to combat the deliberate and accidental non-compliance?


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## mcriot29

So the prsi is going to be taking at source , would that not mean every one will move to anpost , also i bet dirt goes to 35 percent in the next budget that would mean 39 percent taking at source


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## Greekwife

So, if I earn Deposit Interest at the moment which is less than €3,174 and do not earn any other income at all then I do not have to file either a Form 11 or Form 12 as DIRT covers the tax element of the Deposit Interest - is that correct ?

And if in 2014 I still earn less than €3,174 Deposit Interest and am still not earning anything else and I have read that the PRSI Threshold is €5,000 and I don't pay PRSI for anything under that then what happens ?

And what happens to our Joint Savings as my husband is a PAYE worker ?


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## ClubMan

mcriot29 said:


> So the prsi is going to be taking at source


We don't know yet unless there was some announcement on this in recent days?


> would that not mean every one will move to anpost


Don't underestimate the power of inertia...


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## Lightning

The Sunday Business Post asked the Revenue if PRSI would be deduced at source from the deposit accounts or via tax returns. The Revenue replied that they has not made their mind up on the implementation yet.


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## theresa1

At source would be the only logical option and hopefully most state savings products will escape this.


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## oldnick

It may seem strange but if nobody puts money into banks then ,amazingly, banks won't be able to lend. Equally, if people take out all their money out of banks ..then no banks.

It would seem folly for state savings to be treated differently from bank savings.


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## frankmac

Im self-employed and paid PRSI on my deposit interest for 2011. Why are they saying it is to be implemented from 01/01/2013?


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## Palerider

It is now being extended to every person that receives interest income, previously PAYE were excluded.


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## mcriot29

Do self employed pay PRSI on savings cert interest at the moment, as if they dont we can be sure PAYE wont either


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## Lightning

mcriot29 said:


> Do self employed pay PRSI on savings cert interest at the moment



They dont.


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## kdoc

CiaranT said:


> The Sunday Business Post asked the Revenue if PRSI would be deduced at source from the deposit accounts or via tax returns. The Revenue replied that they has not made their mind up on the implementation yet.



Ciaran wouldn't deducting it at source be problematic if an individual has accounts spread over a number of institutions.


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