# Form 11, DIRT, and joint accounts



## extopia (12 Oct 2006)

When entering gross amount of Irish interest on the form 11, is it acceptable to split it in half between self and spouse if the interest is paid in a joint bank account?

This could be advantageous if the higher earner is in 42% tax band and lower earner has not reached the limit of the 20% threshhold, so is it OK to do so?


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## ClubMan (12 Oct 2006)

Why is this an issue? _DIRT _is normally (always?) the full extent of one's tax liability on deposit interest and it is not subject to additional income tax deductions.


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## extopia (12 Oct 2006)

Sorry, you're right about that - you have to declare the gross amount on the form 11 but the amount of interest subject to DIRT effectively raises your 20% income band (when you look at how the calculations are done on ROS).

PRSI and levies are payable on this kind of income - at least if you fill in the online form, so it could still make a difference.

Also, I asked only about Irish interest but I would extend my question to foreign interest and dividends - which are taxable at the higher rate as well as subject to PRSI and levies, as far as I can determine.

So, to rephrase the question, can interest and dividends earned on joint accounts be split among both spouses, regardless of who earned the money that was deposited in the account in the first place?


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## ClubMan (13 Oct 2006)

For a married couple on joint/aggregated married taxation (which you should be if one spouse is on 20% and the other on 42%) then I don't think that it makes any difference since the allowances/reliefs are shared and transferred if necessary anyway.

If in doubt get independent, professional advice.


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## extopia (13 Oct 2006)

Makes a difference alright if the lower earner has not earned the full €20,400 (for 2005) that can be taxed at 20%.


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## ClubMan (13 Oct 2006)

No - on joint/aggregated married taxation the unused standard rate band would be transferred to the spouse on 42% anyway.


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## Tenacious (13 Oct 2006)

extopia said:


> When entering gross amount of Irish interest on the form 11, is it acceptable to split it in half between self and spouse if the interest is paid in a joint bank account?
> 
> This could be advantageous if the higher earner is in 42% tax band and lower earner has not reached the limit of the 20% threshhold, so is it OK to do so?


 
Irish deposit interest is always taxed at 20%. Your standard rate tax band should be increased by the amount of the deposit interest (at gross). You will get a tax credit for DIRT deducted at source. Dividends however are taxable at your marginal rate. You will be able to claim a tax credit for DWT. ROS will automatically do this on the Form 11.


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## extopia (13 Oct 2006)

Makes a difference alright if the lower earner has not earned the full €20,400 (for 2005) that can be taxed at 20%. In such a case it would be disadvantageous to allocate income incorrectly to the earner on the higher rate.

It would seem to me that the natural thing to do with interest and dividends in a joint account would be to split them equally between the spouses in the tax return.


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## ClubMan (13 Oct 2006)

extopia said:


> Makes a difference alright if the lower earner has not earned the full €20,400 (for 2005) that can be taxed at 20%. In such a case it would be disadvantageous to allocate income incorrectly to the earner on the higher rate.


No if the couple are on joint/aggregated married taxation which will allocate/transfer standard unused rate band/allowances/credits in the most advantageous manner. Any overpayments of income tax (in this or any other _PAYE _situation) that do arise at the end of the year can be recouped by asking for a _P21 _balancing statement.


> It would seem to me that the natural thing to do with interest and dividends in a joint account would be to split them equally between the spouses in the tax return.


 I don't see the point if the couple are on joint/aggregated married taxation. Again see above.

Get professional advice if you are in doubt.


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## Tenacious (13 Oct 2006)

It makes no difference whose name the deposit interest is on the certificate of interest as Irish deposit interest is only taxable at 20%. You do not have have to make up the 22% difference on your tax return, unlike in the case of dividends. 
See here : [broken link removed]

It may not be a bad idea to put shares in joint names as when you come to sell the shares you will get two personal exemptions (€1,270 x 2).


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## ClubMan (13 Oct 2006)

Tenacious said:


> It may not be a bad idea to put shares in joint names as when you come to sell the shares you will get two personal exemptions (€1,270 x 2).


Transfer between spouses to avoid CGT


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## Tenacious (13 Oct 2006)

Sorry I meant buy shares in joint names, not transfer.


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## extopia (13 Oct 2006)

ClubMan said:


> No if the couple are on joint/aggregated married taxation which will allocate/transfer standard unused rate band/allowances/credits in the most advantageous manner.



There are limits to the transfer of rate bands, no?

Standard (20%) rate band for married two-income couple for 2005 is 38,400 plus an additional 20,400 allocated to the lower earner. If the higher earner earns over 38.4k there is no "unused" rate band, as, to quote the Revenue, "The increase in the standard rate tax band is restricted to the lower of €20,400 or the amount of the income of the spouse with the lower income."

So surely if the lower earner makes less than €20,400 it's in the couple's interest to attribute as much dividend or foreign interest possible to the lower earner in order to use up the rest of the 20,400 band? 

Am I missing something?

Professional advice caveat noted.


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## ClubMan (13 Oct 2006)

Tenacious said:


> Sorry I meant buy shares in joint names, not transfer.


Transferring does the job just as well.


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## extopia (14 Oct 2006)

Well as I say transferring the "unused" portion of the 20% rate band it doesn't work in my case.

Can anyone answer the essential part of my original question: 

If interest or dividend income is paid in a joint account, should it be split equally between both spouses when completing a joint-assesment tax return via Form 11?


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## ClubMan (14 Oct 2006)

I was referring to transferring shares from one spouse to another to avail of _CGT _allowances. No stamp duty. At worst a small admin fee charged by the company's registrar.


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## extopia (14 Oct 2006)

Huh? Is that answer to my post? I think some lines are getting crossed here... 

Maybe I should start a new thread.


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## Tenacious (14 Oct 2006)

extopia said:


> If interest or dividend income is paid in a joint account, should it be split equally between both spouses when completing a joint-assesment tax return via Form 11?



Why don't you crunch the numbers on the ROS offline application to see what is the most tax efficient option?


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## ClubMan (14 Oct 2006)

extopia said:


> Huh? Is that answer to my post? I think some lines are getting crossed here...
> 
> Maybe I should start a new thread.


I was responding to the post from _Tenacious _above when I spoke about transferring (shares) between spouses.


Tenacious said:


> It may not be a bad idea to put shares in joint names as when you come to sell the shares you will get two personal exemptions (€1,270 x 2).


This thread is about how best to manage tax issues for married couples isn't it?


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## extopia (14 Oct 2006)

Well I started the thread and the thrust of my original question was the allocation of interest and dividend income earned in a joint account.

There's no useful info in this thread, I don't think - how about deleting it? I'll start a new one with a better phrased question...


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## extopia (14 Oct 2006)

Tenacious said:


> Why don't you crunch the numbers on the ROS offline application to see what is the most tax efficient option?



That's what I've been doing. It's more tax efficient to split, so that's what I plan to do, assuming it's legitimate to do so. Thanks for your reply.


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## jocmccoy (18 Sep 2007)

To take extopia's analysis of dividend income held in both spouses names a step further, rather than split the income between both spouses, can the full amount of the income not be allocated to the spouse who still has income allowable to be taxed at the lower rate?


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## extopia (18 Sep 2007)

I'm sure the Revenue would frown on this. But I can't say definitively that this is not allowable. I wouldn't do it though.


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