# Why being charged USC on December ARF withdrawal??



## KarlC (25 Mar 2011)

I have an ARF with a Life company within the Irish market.. My 5% deemed withdrawal as per revenue rules went through in December 2010.
However unlike any other provider i deal with, my payment was not made to me until Januray 2011, and i was therefore charged the USC on my payslip.
My issue is why am i being charged the USC when my withdrawal and income from ARF was for the 2010 Tax Year, therefore i was subject to differnet rules/levies..
The USC was introduced on income earned from 1st January 2011.
Do you think if they had decreased tax rates i would have been charged the lower amount.. Don't think so??
Thoughts and views welcome??
Has anyone else been caught in this trap??


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## jpd (25 Mar 2011)

If payment was made in January, then USC has to be charged


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## boaber (25 Mar 2011)

KarlC said:


> Do you think if they had decreased tax rates i would have been charged the lower amount.. Don't think so??



Yes they would.  They operate the PAYE rules in force at time of payment.


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## KarlC (28 Mar 2011)

So USC can be charged on income from a previous year that was subject to differnt PAYE rules??


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## boaber (28 Mar 2011)

But the income was not made in the previous year?


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## Gervan (28 Mar 2011)

If an employee believes he would have paid less income tax on the pay earned in previous year but paid in current year, if it had been taxed in the year when earned, he is entitled to ask Revenue to recalculate his income tax liability for the year in which the payment was made, and the year in which it was earned.
However, does that apply to USC?
If so, it would mean waiting until the current year has ended, before the request could be made.


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## KarlC (31 Mar 2011)

boaber said:


> But the income was not made in the previous year?



It was.. It was imputed distribution for 2010..


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## Homer (18 Apr 2011)

KarlC said:


> It was.. It was imputed distribution for 2010..



Did you receive an actual payment, or was it just an imputed distribution?  If the latter, I don't see how it could be subject to 2011 USC.  If the former, why was it not paid during 2010 if you were aiming to avoid the deemed distribution tax?

Doesn't sound right to me.


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## Homer (18 Apr 2011)

By way of follow up to my earlier email, if the ARF provider made a mess of processing the payment, they should be held liable for the tax consequences.  

I suggest you approach them and point this out to them and say that you will refer the case to the ombudsman if you don't get a satisfactory response.

Regards
Homer


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## KarlC (21 Apr 2011)

I agree. I cannot understand why they pay their distributions in the month of January for the previous tax year (2010).
Their explanation was that they paid the distribution for 2009 in Jan 2010, due to changes taking place with internal accounting procedures.
So they paid 2009 in Jan 2010, and now paid 2010 in Jan 2011.
I have written a formal lettter to them outlining my issue with this, given tax changes and also the fact that a deemed distribution should be paid for the year it is meant to be paid.
No other Life provider i am aware of pays the following year.
Is it worth taking up with the Ombudsman??


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## Conan (21 Apr 2011)

The increase in the deemed drawdown from 3% to 5% introduced in the December Budget was applicable to ARF values on 31st December 2010. That being so, I thought that most ARF providers actually paid the additional 2% in Jan. This would give rise to the question as to whether the USC should apply to this drawdown since the payment was actually made in 2011 even though it applied to 2010.
Any views?


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## Homer (21 Apr 2011)

Sounds like a catch 22 (read the book if the reference is lost on you).

If the government is requiring a minimum level of distribution, then it it is only fair that the payment should be allocated to the relevant year.

Then again, when did fairness ever come into play when tax liability is being calculated?

Homer


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