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

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.
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Yeah there was a large article in last Sunday's Times about exactly that...
 
Other than that Indo article, is there an official source to the 4% PRSI charge on all non-PAYE income over 3,174??
 
[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.
 
prsi

IS the 5 year savings cert with An Post subject to the 4%PRSI tax.
 
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.
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46E said:
IS the 5 year savings cert with An Post subject to the 4%PRSI tax.
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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?
 
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.
 
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.
 
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.
 
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.
 
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.
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Great tip Oldtimer. I will add this tip as a note to the State Savings products in the term deposit best buy thread.
 
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.
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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.
 
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.
 
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.
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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.
 
CiaranT said:
It would appear that NTMA State Savings products which are "completely tax free" are not subject to PRSI.
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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?
 
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)
 
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).
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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.
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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).
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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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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.
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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.
 
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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