# Dirt to 41% + 4% PRSI = 45%; no USC



## mcriot29 (15 Oct 2013)

If dirt is 41% for higher earners will that mean you tell your bank what rate you pay in income tax seems very messy


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## rf1980 (15 Oct 2013)

Is it possible to move savings to different European banks to get higher interest? This increase in DIRT hardly makes it worthwhile keeping in Irish banks.


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## cork (15 Oct 2013)

Do credit unions still offer the fixed term dirt free accounts?


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## Crugers (16 Oct 2013)

If any interest/dividend is paid DIRT free, the amount received is liable for income tax purposes!


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## TheJackal (16 Oct 2013)

Yes Noonan confirmed the PRSI charge is coming in. 

So 41% DIRT + typically 4% PRSI on top...


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## Brendan Burgess (16 Oct 2013)

As there was a huge amount of confusion on this yesterday and as it has been clarified this morning, I have deleted the confusing posts and edited the heading.

Brendan


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## Greekwife (16 Oct 2013)

Did Noonan not say in the Dail yesterday that DIRT would be the final liability for Savings ?  When did he clarify ?

How will the PRSI be collected ?


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## Lightning (16 Oct 2013)

What a mess. 

Yesterday, Noonan implied that DIRT was the only liability. 

Today, Joan Burton said they did not know if PRSI would be applied and to "wait for the finance bill". However, today also, Noonan confirmed that PRSI would apply but gave no guidance as to how it would be collected. I assume Noonan, this time, is correct. 

Can someone please ask Noonan / DoF how PRSI will be collected? 

It would appear that NTMA State Savings products which are "completely tax free" are not subject to PRSI. However, have the NTMA come out and put this in writing?

I need to update the grossed up rates for term deposits to include PRSI which will make the State Savings products even more attractive.


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## Greekwife (16 Oct 2013)

Since Noonan announced this in the Budget for 2013 (Dec 2012) I have been trying to clarify this.

I emailed my local (FG) TD in Dec 2012.  He emailed Noonan who replied in email to wait for the Finance Bill.  After there was no mention in the Finance Bill I emailed again and got another reply from Noonan saying to wait for the legislation but there was no mention in any Legislation published.  So I emailed again and was again told to wait for relevant legislation and in any event it was Joan Burton who dealt with PRSI and to direct queries there.  At that point I gave up and decided to wait for this Budget and see if it was any clearer. Apparently not.


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## Lightning (16 Oct 2013)

When is the finance bill published? Isnt it around February or will it be earlier this time? I don't think we can wait for the finance bill. 

If PRSI is to be deducted at source banks will need guidance asap as they will need to apply this to interest payments from 1 January 2014. Many systems etc will need to be updated on the banks side to deal with multiple PRSI rates and PRSI exemptions.


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## mcriot29 (16 Oct 2013)

From todays irish times
Savers were hit very hard with dirt tax climbing by 8percent to 41 percent, while other tax changes mean anyone who makes a tax return to revenue for things including rent will have to pay prsi from next year

So it looks unless you make a tax return you wont pay prsi on savings 
Not taking at source


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## Lightning (16 Oct 2013)

Thanks for sharing that, hopefully The Irish Times researched that piece with the DoF/Revenue. 



mcriot29 said:


> So it looks unless you make a tax return you wont pay prsi on savings
> Not taking at source



But you would be breaking the law by not filing a tax return.


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## Boyd (16 Oct 2013)

Huh....so do all PAYE people need to do a tax return now?


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## Lightning (16 Oct 2013)

username123 said:


> Huh....so do all PAYE people need to do a tax return now?



Yes, if (1) what the Irish Times said is accurate and (2) you have deposit income.


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## rayn (16 Oct 2013)

Myself and my spouse are both in receipt of paye pensions. However we also get a small UK pension and now have to make an annual return by 31st October. It won't be long before everybody will be required to do same. 
"Dirt PRSI " will speed this up.


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## Boyd (16 Oct 2013)

CiaranT said:


> Yes, if (1) what the Irish Times said is accurate and (2) you have deposit income.



Ugh, surely this is the point of PAYE, so we *don't *have to do this! In fairness what % of people will be bothered, or even know they have to do so?!


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## Lightning (16 Oct 2013)

username123 said:


> Ugh, surely this is the point of PAYE, so we *don't *have to do this! In fairness what % of people will be bothered, or even know they have to do so?!



PAYE workers have always had to file a return if they have non-PAYE income. 

A low percent will know how to do this. 

Deduction at source @4%, with an electable claim back option, would yield a much higher return for the government.


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## rayn (16 Oct 2013)

Ciaran, 
For a number of years I would go to tax office at beginning of year and give estimate of non PAYE income for the coming year and my certificate of tax free credits would be adjusted to ensure adequate tax was taken by PAYE to cover the non PAYE income.
At years end a PAYE balancing statement would adjust and overpayment would be refunded and underpayment would be taken back in the next year.
Only in the last two years have I had to fill in a return. There is a short form 12S I think it is that is suitable for simple cases and this would I think be the one to cover Dirt etc.


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## MysticX (16 Oct 2013)

Wasn't DIRT originally introduced because people weren't inclined to file a tax return on deposit interest (or at least the primary reason)?


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## Lightning (17 Oct 2013)

I have read that banks engaged in a massive lobbying campaign to prevent PRSI being deducted at source. This adds weight to the belief that PRSI will not be deducted at source. 



MysticX said:


> Wasn't DIRT originally introduced because people weren't inclined to file a tax return on deposit interest (or at least the primary reason)?



Well, deduction at source was definitely introduced to deal with the fact that few people file a return.


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## Boyd (17 Oct 2013)

CiaranT said:


> I have read that banks engaged in a massive lobbying campaign to prevent PRSI being deducted at source. This adds weight to the belief that PRSI will not be deducted at source.



Yeah there was a large article in last Sunday's Times about exactly that...


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## Greekwife (18 Oct 2013)

From the Irish Independent.

http://www.independent.ie/business/...ith-savings-and-rental-property-29670170.html

This article says that a person now must have above €3,174 income pa from unearned income to be liable for the PRSI.


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## Protocol (18 Oct 2013)

Other than that Indo article, is there an official source to the 4% PRSI charge on all non-PAYE income over 3,174??


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## DerKaiser (18 Oct 2013)

[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._

Seems that there are rules around who needs to file a return e.g. the self-employed and 'chargeable' PAYE workers with non-PAYE income

Looks like anyone who fills the form pays the PRSI, whilst those not filing a return are let off the hook.


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## 46E (18 Oct 2013)

*prsi*

IS the 5 year savings cert with An Post subject to the 4%PRSI tax.


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## Lightning (18 Oct 2013)

Fair play to Charlie Weston in the Indo for helping clear up this PRSI lack of clarity up by asking the right question to the DoF and DoSP. 

The below is pretty clear ... 



> *They will have to file an income-tax return*, according to the Departments of Finance and Social Protection.





46E said:


> IS the 5 year savings cert with An Post subject to the 4%PRSI tax.



This NTMA State Savings product is "tax free", PRSI is a tax, hence, it should be free from PRSI. I can't see anything in writing from the NTMA on this yet though. Has anyone asked the NTMA?


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## theresa1 (18 Oct 2013)

I have to say this PRSI or no PRSI saga has been going on for far too long. Incompetence as far as I'm concerned from Noonan and Co.

How will the NTMA 4 and 10 year bonds be treated? Far too many questions still unanswered.


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## Lightning (19 Oct 2013)

I have emailed the NTMA to try and get something in writing on the tax treatment for State Savings products that are part subject to DIRT and the PRSI implications for these products. I will post their response.


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## oldtimer (19 Oct 2013)

I notice there is nobody talking about state savings ten year solidarity bonds now despite the fact they are the best savings product at the moment. True, ten years is a long time and early withdrawals bite severely into the interest (plus PRSI), still, if left for the full term, equates to over 5% when compared to saving with banks and other instutions. The capital never reduces and can be drawn out at any time. The best way to purchase them is in multiples, not in one lump sum e.g. if one wanted to invest say €50,000, buy 10x€5,000 or 5x€10,000 bonds rather than one €50,000. If that rainy day comes one need draw out the required amount from one of the bonds, thus protecting the others. Just my tuppence worth.


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## theresa1 (19 Oct 2013)

I'm with you on this oldtimer - as soon as my wages go into the bank the money is coming out and I'm buying 10 year bonds on a regular basis. As said before the NTMA bond card is so handy and i usually do a few thousand euro at a time. Pity Visa debit max is €1,500 as i might start using this instead of handing over cash.


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## Lightning (19 Oct 2013)

10 years really is a long period of time and so much, that is difficult to foresee, can occur in that period.  



oldtimer said:


> The best way to purchase them is in multiples, not in one lump sum e.g. if one wanted to invest say €50,000, buy 10x€5,000 or 5x€10,000 bonds rather than one €50,000. If that rainy day comes one need draw out the required amount from one of the bonds, thus protecting the others.



Great tip Oldtimer. I will add this tip as a note to the State Savings products in the term deposit best buy thread.


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## kdoc (20 Oct 2013)

For joint accounts, I suppose prsi will apply on interest over €6348.


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## Lightning (20 Oct 2013)

Greekwife said:


> This article says that a person now must have above €3,174 income pa from unearned income to be liable for the PRSI.



Is this definitely correct? If so, does this mean that there is a PRSI free allowance for earned income and a separate PRSI free allowance for unearned income? I am surprised that there will be 2 entirely separate PRSI allowance thresholds.


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## Joe_90 (20 Oct 2013)

As referred to earlier the €3,174 is the threshold for filing a Form 11.  As a chargeable person the unearned income will be subject to PRSI.  

There is no PRSI exemption as I see it, it's either you are a chargeable person and have to file a Form 11 or not, in which case you should file a Form 12 (no PRSI on a Form 12).  

I assume that a couple who are jointly assessed will be subject to PRSI on unearned income whether the income is above €3,174 or not for both spouses.


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## longshot (20 Oct 2013)

CiaranT said:


> Is this definitely correct? If so, does this mean that there is a PRSI free allowance for earned income and a separate PRSI free allowance for unearned income? I am surprised that there will be 2 entirely separate PRSI allowance thresholds.


  Revenue considers 3.174 Euro  in unearned income insignificant, anyone with unearned income above this threshold is deemed a chargeable person and must file a return. Source: Citizens Information Website.


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## Grizzly (21 Oct 2013)

CiaranT said:


> It would appear that NTMA State Savings products which are "completely tax free" are not subject to PRSI.



My very elderly father has had NTMA state savings products all his life. While trying to tidy up his financial affairs we have discovered that he has never declared these savings to anyone because they were "tax free". His thinking was that because he didn't have to pay tax on them then as far as he was concerned they didn't exist as far as the government was concerned.
So whenever asked about his savings on any official form he just ignored mentioning any NTMA accounts.
Does having NTMA accounts entitle anyone "not" to mention them..... because the interest received is income after all?


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## Greekwife (21 Oct 2013)

From the Dept of Social Protection website

http://www.welfare.ie/en/Pages/Freq...-Broadening-of-the-Income-Base-for-PRSI-.aspx

Extract: (I have added the underlines)

Q. Who is liable?

All individuals over the age of 16 and under pensionable age who have earnings from employment or who are in receipt of an occupational pension and who have additional unearned income are liable.

So in the following Examples do the persons have to pay PRSI on Deposit Interest and / or what forms are required to be filed with Revenue.

Example A

A 17 year old student with no Income apart from Deposit Interest (less than €3174) paid on a Credit Union Account

Example B

A 35 year old PAYE worker with no additional income apart from Deposit Interest (less than €3174) from a Savings Account

Example C

A 37 year old Stay-at-Home Parent, married, spouse a PAYE worker, with no Income apart from Deposit Interest (less than €3,174) from a Savings Account and with Spouse with no Additional Income apart from Deposit Interest (also less than €3,174)

Example D

An Adult with Special Needs whose only Income is Disability Allowance and also Deposit Interest (less than €31,74) from a Savings Account

Example E

A PAYE worker with Dividends from Shares and Deposit Interest (less than €3174 combined)


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## Lightning (21 Oct 2013)

Great link GreekWife, thanks. 

Some key quotes:



> Q. I am paying DIRT on my savings. Do I also have to pay the new PRSI charge?
> 
> Yes provided that you are over 16 and under pensionable age and that you are a chargeable person in accordance with the Revenue definition of a chargeable person (detailed below).



*Collection method* (confirms what was reported in this thread):



> Q. Will the bank deduct PRSI at source in the same way as DIRT?
> 
> No the banks are not involved in the collection of any PRSI liability. *Collection will be through the Revenue self-assessment system*.



*Who needs to declare* (confirms what was reported in this thread):



> Q. What is a chargeable person?
> 
> A chargeable person does not include a PAYE taxpayer (i) who does not have other income or (ii) who has an element of other insignificant income that is fully taxed through the Revenue Commissioners PAYE system (Revenue regard amounts not exceeding €3,174 as insignificant. Individuals with income exceeding €3,174 must pay and file under Revenue's self-assessing system).



Given that the majority of people do not have €3,174 of unearned income, it would seem that most people will escape the 4% PRSI charge. So, the effective deposit interest tax rate remains 41% for a large portion of the population. 

*Age exemption:*



> Q. I am 67 years old, am I liable to this new charge?
> 
> Generally at pension age you are no longer liable to PRSI on any income regardless of its source.


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## Lightning (21 Oct 2013)

With regard to whether NTMA State Savings products are liable to PRSI (if you have unearned income in excess of €3,174), the NTMA have replied to a query from me with the below ...



> Savings Bonds and Certificates are tax free products. The mention of PRSI in the recent budget refers to the Finance Bill which has yet to be passed through the Dail. We have not been given any information about this and are therefore, at the moment, unable to comment. All I can say is that the changes, if any, do not come into effect until 2014. There will be a statement in the press at that time outlining any amendments if any to savings and investments.



It seems that the NTMA are uncertain if their State Savings products will be subject to PRSI. Logically, I would have thought that "tax free" means PRSI tax free also, but maybe not.


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## The Ghoul (21 Oct 2013)

Good work CiaranT getting the NTMA to state that. 

I now have the majority of my savings in savings certs, savings bonds, solidarity bonds and prize bonds. My yearly interest from these would be >3174 euro. I also have some bank accounts and my yearly interest from them would be <3174 euro. I'm hoping that things will become clear soon in terms of whether I'm a chargeable person or not and how much PRSI I have to pay if any.

I wonder if some NTMA products will be treated differently than other eg maybe PRSI would be payable on the solidarity bond yearly interest but not on the bonus or on the interest from savings certs/bonds.


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## Lightning (21 Oct 2013)

The Ghoul said:


> I wonder if some NTMA products will be treated differently than other eg maybe PRSI would be payable on the solidarity bond yearly interest but not on the bonus or on the interest from savings certs/bonds.



Yeah, perhaps, we obviously need to wait for the Finance Bill for complete certainty. Hopefully, the Finance Bill will be published early given that the budget has been announced early. 

I bet the NTMA are lobbying the DoF for State Savings income to be fully exempt from PRSI. Maybe the DoF will look for a NTMA rate cut in exchange!


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## theresa1 (21 Oct 2013)

I hope I'm wrong but I don't think any distinction will be made between 4 and 10 year bonds and the totally DIRT free products. The more I read about PRSI the more I can see it not being considered as a tax.


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## theresa1 (22 Oct 2013)

Did some digging:-

http://oireachtasdebates.oireachtas.ie/Debates Authoring/DebatesWebPack.nsf/takes/dail2013030500066

Suggests 4 and 10 year bond yearly 1% depending of circumstances of individual could be hit with 4% prsi.Tax free bonus would not be hit with 4%.


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## Lightning (22 Oct 2013)

Great spot Theresa, in particular the below quote from Noonan. 



> Noonan: The National Solidarity Bonds consist of two elements. On maturity, the bonds attract a lump sum payment that does not form part of income as estimated in accordance with the Tax Acts and is, *therefore, exempt from income tax and universal social charge and from the charge of PRSI. *
> 
> Annually, a payment of interest is made to the bondholder and deposit interest retention tax (DIRT) is deducted. Interest, which is liable to DIRT, is specifically excluded from the charge to universal social charge. *However, PRSI may be chargeable on such interest depending on the circumstances of an individual*.



It increasingly seems likely / possible that any State Savings income that is subject to DIRT will also be subject to PRSI if the individual has over €3,174 in unearned income per year.


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## theresa1 (23 Oct 2013)

Another subtle change I have noticed when I compared the NTMA Brochure 3 from July 2011 with June 2013 under the question "will my return be subject to tax?"

"The lump sum bonus payments for the 4 year and the 10 year bonds are not subject to"

"Tax" - July 2011

"DIRT" - June 2013

i.e The word Tax replaced with the more limited abbreviation Dirt.


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## ScottSF (23 Oct 2013)

oldtimer smartly mentioned state savings bonds in this discussion and the possibility for even better interest now compared with banks due to the new tax rules:


> state savings ten year solidarity bonds now despite the fact they are the best savings product at the moment. True, ten years is a long time and early withdrawals bite severely into the interest (plus PRSI), still, if left for the full term, equates to over 5%



...however I wonder where the 5% interest come from.  Looking at the statesavings.ie (as a new user I can't post urls) website, a gross AER of 3.05% is listed.  Did it just decrease is all or am I looking at the wrong information? Thanks!


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## The Ghoul (23 Oct 2013)

.





> ..however I wonder where the 5% interest come from. Looking at the statesavings.ie (as a new user I can't post urls) website, a gross AER of 3.05% is listed. Did it just decrease is all or am I looking at the wrong information? Thanks!


Gross AER on the 10 year SB is indeed 3.05%. Based on current rates, no PRSI and 33% DIRT, net AER is 2.79%. 

The yearly interest on the SB is subject to DIRT and possibly PRSI. Assuming that the bonus on the SB is not subject to tax:

If DIRT+PRSI on the yearly interest is 41% I calculate the net AER to be 2.73%

If DIRT+PRSI on the yearly interest is 45% I calculate the net AER to be 2.70%

So, a big jump in tax from 33% to 45% doesn't make that big of a difference. Also, the higher the tax goes the bigger the gap between the SB and bank deposits as all the return on bank deposits is affected by the tax rise whereas the bonus of the SB (which makes up most of the return) is unaffected. 

The ~5% figure that people are quoting is the "grossed up" return i.e the gross interest that you would need to get from a bank deposit to get the same net interest as the SB.


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## Lightning (23 Oct 2013)

Exactly, you will never see the 5% return, it is purely a comparable rate in order to compare against the AER paid on normal deposit accounts. 



theresa1 said:


> Another subtle change ...



Good spot Theresa, this adds weight to the possibility that bonus interest will be subject to PRSI on 'chargeable persons'.


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## Lightning (24 Oct 2013)

The Social Welfare and Pensions Bill 2014 was published yesterday. 

The provision related to PRSI is as follows:



> Change in liability for PRSI (Section 3)
> From 1 January 2014, the exemption from PRSI applying to employed contributors and occupational pensioners under 66 years, whose only additional income is unearned income, will be abolished. This means that unearned income such as rental income, investment income, dividends and interest on deposits and savings will be liable to PRSI at 4% for the above people provided the person is a ‘chargeable person’ in accordance with the Revenue definition. This will apply to people with unearned income in excess of €3,174. It will not apply to PAYE taxpayers with no other income, or additional income less than €3,174. In addition, people who have reached State pension age of 66 are not liable to pay PRSI, and therefore will not be affected.
> 
> “This measure, in addition to the PRSI changes that I implemented last year, will ensure the stability of the Social Insurance Fund so that it can continue to pay the pensions and benefits required by those who need them. It is important to note that this measure will not affect those who have already reached pension age and who are therefore exempt from PRSI,” Minister Burton said.



The bill will obviously change before been passed.


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## TheJackal (24 Oct 2013)

CiaranT said:


> PAYE workers have always had to file a return if they have non-PAYE income.
> 
> A low percent will know how to do this.
> 
> Deduction at source @4%, with an electable claim back option, would yield a much higher return for the government.


 
Totally agree.

Self declaration will be very low. Taking it at source makes far more sense. I imagine this will be rectified in 2015 or so once they see little income coming in


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## Gervan (24 Oct 2013)

If indeed the €3174 is the limit below which Prsi will not be payable, how would the bank know the depositor's income? So it can't be taken at source by the bank.


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## theresa1 (24 Oct 2013)

Gervan said:


> If indeed the €3174 is the limit below which Prsi will not be payable, how would the bank know the depositor's income? So it can't be taken at source by the bank.




Every bank account would be hit with the 4% and then if your under €3174 you would have to apply to revenue or social protection to get 4% back.


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## BeyonddePale (3 Nov 2013)

Whole thing certainly very messy isn't it? Wonder if the 3174euro  threshold includes deposit interest before or after DIRT deducted?


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## Lightning (3 Nov 2013)

Before DIRT. Gross deposit interest.


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## BeyonddePale (6 Nov 2013)

This whole thing has the potential to be very messy. Say for example one earned 4174euro in Gross interest...is one then liable for PRSI on all of this, or just the 1000euro above the threshold?

Also, how does one declare a PRSI liability if you haven't needed to make a return before...on PAYE anytime online when claiming tax relief for health expenses etc? But is this not only for PAYE matters? Is PRSI not a separate matter? And when would one make such a declaration? Also, would certificates of interest be needed if one had deposit interest income across a number of financial institutions?

And, if a depositor had a fixed term account that spanned more than a year, when would the PRSI liability on interest arise? I think this whole action of squeezing depositors is wrong..but if they had any sense the government would levy the PRSI at source and allow eligible individuals to claim a refund. If not, one wonders what the level of compliance will be, if only simply because of the level of hassle and bureaucracy involved.


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## DerKaiser (6 Nov 2013)

As far as i know the decision not to deduct at source was made and the €3174 rule is actually a tool to ensure that huge numbers of people do not make tax returns. At the moment, earn €3175 and you'll pay PRSI on the lot, earn €3173 and no PRSI is due. If the decision was made to deduct at source this rule could be removed.


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## ronaldo (7 Nov 2013)

DerKaiser said:


> As far as i know the decision not to deduct at source was made and the €3174 rule is actually a tool to ensure that huge numbers of people do not make tax returns. At the moment, earn €3175 and you'll pay PRSI on the lot, earn €3173 and no PRSI is due. If the decision was made to deduct at source this rule could be removed.


 
So it would appear that some people may be looking for lower interest products. For example, PTSB give 2.45% for a 1-year savings account. This means that, if they introduced the exact same product running alongside this one, but at a 2.4% rate, someone with €130,000 to deposit for the year would be better choosing the lower rate for PRSI reasons. Interesting!


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## theresa1 (7 Nov 2013)

I agree ronaldo - I'm concerned that I might be close or over the €3174 - I've moved most of my savings into state savings and have bonds and certs maturing at different dates so it would be tricky to work out year to year what I'm getting.

I have even considered getting prize bonds rather than 10 year solidarity bonds because of the €3174 'barrier'. It's a crazy situation - i don't have a highly paid job but yes I certainly like saving money - it's nearly a hobby for me.


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## The Ghoul (7 Nov 2013)

Clarity is needed in both in terms of the obligation to make a tax return and the obligation to pay PRSI. Let's say someone has an An Post savings cert which accrues 4000 per year and a deposit account which pays 1000 gross per year. First question would be as already posed by BeyonddePale, how are multi year products treated.

In the above case, assuming that yearly income is deemed to be 4000 from the savings cert (even though the cert has not matured or been encashed) and 1000 from a deposit account is it a Form 11, Form 12 or no return at all and is PRSI payable on
a) 5000
b) 4000
c) 1000
d) 5000 minus 3174
e) 0

In the case of solidarity bonds it gets more complex as the SB may be treated differently in terms of PRSI than other state savings products, also the two components (interest and bonus) of the SB may be treated differently from each other.


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## Lightning (7 Nov 2013)

The Ghoul said:


> Clarity is needed in both in terms of the obligation to make a tax return and the obligation to pay PRSI. Let's say someone has an An Post savings cert which accrues 4000 per year and a deposit account which pays 1000 gross per year. First question would be as already posed by BeyonddePale, how are multi year products treated.



Surely, the accrual period has nothing to do with it, like with DIRT. The payment date, rather than the accrual period, is surely what matters. 



The Ghoul said:


> d) 5000 minus 3174



There is a PRSI minimum threshold but there is no PRSI 'free allowance'. Hence, one cannot simply deduct 3,174 if they get more than 3,174 in unearned income per year.


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## BeyonddePale (8 Nov 2013)

So if I have been a prudent saver who has not bought a  house etc. and am due about 4000euro gross interest I must now give away a further 4% of the whole sum of this in PRSI without getting anything in return?  Unbelieveable!!...savers and the prudent punished once more.

Take it that savers will have to file a return around October 2015 for any eligible interest earned in 2014? How many PAYE workers with no other income will know how to do this, even remember how to do it or forget how to do it? Will this be incorporated into PAYE anytime? For those who of us who always want to stay tax compliant this whole thing is a farce. Come next elections think I’ll vote for any politician who exposes the absurdity of it all. What chance that any of them might?


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## MysticX (8 Nov 2013)

BeyonddePale said:
			
		

> Take it that savers will have to file a return around October 2015 for any eligible interest earned in 2014? How many PAYE workers with no other income will know how to do this, even remember how to do it or forget how to do it? Will this be incorporated into PAYE anytime? For those who of us who always want to stay tax compliant this whole thing is a farce. Come next elections think I’ll vote for any politician who exposes the absurdity of it all. What chance that any of them might?



Yes, many of us have thought along those lines but its especially annoying that they insist on making us file a self return on it. 

The weak and blatant attempt to make the tax hike sound less worse by virtue of collecting almost half of it as "PRSI" is almost more infuriating than the tax hike itself. (guess they couldn't use levy after the income levy, health levy, insurance levy, pension levy, investment levy etc...)

Now add the idiocy of having to file it via an intimidating tax system (come on would more than 1% of PAYE workers have any idea how to self assess and all the implications of it?)


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## dub_nerd (9 Nov 2013)

CiaranT said:


> Surely, the accrual period has nothing to do with it, like with DIRT. The payment date, rather than the accrual period, is surely what matters.
> There is a PRSI minimum threshold but there is no PRSI 'free allowance'. Hence, one cannot simply deduct 3,174 if they get more than 3,174 in unearned income per year.


 
Correct. I think some people are making this more complicated than it is. It seems pretty straightforward. The PRSI liability is on your unearned income (including deposit interest) paid within a tax year. If you are above the threshold you pay PRSI on all the income. It doesn't matter when the income was earned/accrued, only when it was paid.

I will be making the assumption, until advised otherwise, that the tax free portion of State Savings will also be PRSI free. On the current form 11, there is a box for "deposit income on which DIRT has been deducted" and one for "deposit income on which DIRT has not been deducted". As far as I understand it, you do not currently have to declare your non-DIRT interest from State Savings in _either_ of those boxes. If they introduce a new box specifically for State Savings, I'll fill it in, otherwise I won't be mentioning it.

The new rates do seem pretty draconian. Before Budget 2013 it was 30% (already up from 20% a few years ago), after Budget 2014 it's 45% including PRSI. Last year I paid slightly more tax on deposit income than someone earning the same amount from employment. Next year, I'll pay 50% more tax than a PAYE worker earning the same amount.


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## paulgreen (9 Nov 2013)

I know I am cutting off my nose to spite my face but I refuse to pay these thieves 45% I will therefore not keep funds on deposit anymore it's not as if the returns are anything to shout about anyway and after this ridiculous tax hike there even less attractive! .

Luckly I manage to close down some deposits early to extract the interest at 33%, 45% is a bridge too far.

The whole thing is just a joke all through history people have saved and not been reckless now this stupid government want people to spend spend with reckless abandonment because they have been totally clueless in there approach tax until the pips squeak  won't work......


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## BeyonddePale (9 Nov 2013)

Couldn't agree more with paulgreen....this is legalised robbery in my opinion. To even consider interest as "income" is debatable...most bank accounts  are barely on a par with the inflation rate. Time to consider pulling every cent out of this country! Heard a talking head from the construction industry banging on about why we should spend, spend, spend and not save. This dirt move is a vicious attack on the prudent and utterly reprehensible. There is a group in the UK called "Save our Savers"...we need a campaign here in a similar vein to fight the idiocy that permeates public policy.


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## Bedlam (20 Nov 2013)

Given a tax take of 45% from 2014 for monies held on deposit, would one be better off diverting some of their monthly savings from Deposits to their Pension plan and availing of the generous tax relief

A 5% gross return on a pension is 5%

A 5% gross return on a deposit is 2.75% net

Any views?

Bedlam


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## dub_nerd (20 Nov 2013)

There's no tax relief on putting your savings into a pension. The tax relief is on PAYE income. Also, your pension returns are variable, and possibly negative, unless you put in cash in which case you are earning no more than if it was on deposit. And you pay fees and charges, and the government mugs you for a portion of if every year currently. Also, you can't access it until pension age. No thanks, I rather have my money under my own control (at least until the government raids it in a wealth tax).


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## BeyonddePale (23 Nov 2013)

People say its a simple manner of filling out a form declaring interest paid that year. But its not that simple. For example, with some accounts it's up to you when you decide to have the interest calculated and added to your account. But I suppose the geniuses in government circles never thought of this?


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## BeyonddePale (23 Nov 2013)

Also, does one have to go chasing interest certs from financial institutions? Have tried to contact government local representatives about this, but as yet no reply. But then , do they have a clue?


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