Income tax on interest after DIRT

S

Scouser

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Should I be paying income tax on interest earned from deposits after already paying DIRT? I'm self employed and my accountant has recently completed my tax return for last year and the interest from deposits has been declared as income, was this always the case?
 
Yes DIRT is not a tax in itself. DIRT Deposit Interest Retention Tax. It's a withholding tax.

Interest on deposits is subject to tax at the same rate as DIRT but also PRSI.
 
OP - I'm amazed that you have an accountant who did not advise you of this. As a mere mortal, I have always understood that DIRT is only a portion of the taxable amount - if your interest exceeds the DIRT percentage, then of course it is like any other unearned money, and therefore is taxable. I'd have a word with the accountant, if I were you. If you are liable for taxes that you were not advised about, then potentially you are not getting a good service.
 
Don't get me wrong. The rate of tax on deposit interest is 33% the rate of DIRT is 33%. The difference is that self employed people pay PRSI @ 4%.

It's not 33% on the 67% thats left after DIRT.
 
My interest after DIRT was around 2.6k. On my return this was added to my salary to give my total income, then the tax was calculated - is that correct? I'm sure my account mentioned it but it probably went over my head at the time.
 
The total interest is included approx €3881, then taxed at 33% PRSI at 4% with a credit for the DIRT.
 
Just noticed under credits its listed again as retention tax credit, so essentially if I had zero savings my total income tax would be as it is with the deposit interest.
 
Sorry to ask a stupid question but I am now a bit confused.
If I earn €X gross interest on a deposit a/c DIRT will be deducted from that. Is the net interest left chargeable for income tax?
 
If you are self employed you put in the gross interest on your tax return with a credit for the DIRT. The interest is subject to PRSI.

If your are not self employed then the interest is taxed at 33% and by magic the tax withheld on it DIRT is 33% as well.
 
From 2014, PAYE workers will pay the 4% PRSI on deposits too. Has there been any info yet on how this will be declared/collected?
 
Am being thick here..

doing form 11 2012
the question on DIRT asks for gross income on which DIRT was deducted
-taxable at 30%
- taxable at 33%.

I thought the 33% rate came in on 1 Jan 2013 and therefore interest rcd in 2012 would only at 30% rate so why mention the 33% rate for 2012 .

Have I missed something?
 
From [broken link removed]

A DIRT rate of 33% (from 01-Jan-12) is payable on interest earned on a deposit where the interest cannot be calculated annually or more frequently and the interest cannot be determined until it is paid
 

There's another rate of DIRT 3% higher than the standard rate of DIRT, which applies to accounts that don't pay interest on at least an annual basis.

So on the 2012 Form 11 you'll have a question about amounts taxable at 33%, and amounts taxable at 36%.
 
Thanks guys.

On a semantic neurotic point of view I've always been puzzled by the question asking what was the GROSS deposit interest received on which DIRT was deducted.

As DIRT had been deducted before I received it surely it was not gross interest received

Should not the question read...
what was the gross interest before DIRT was deducted

or -what was the after- DIRT interest received

To accountants it's quite clear but to thickies like me -and I know other who've scratched their heads at the wording -the wording was/is confusing. And I note some posters here not being too clear on this DIRT aspect.
 
On any bank statements I have seen interest is credited gorss and on the same day the DIRT is debited, so technically you receice the interest "Gross".
 

You should get a Certificate of Interest from your bank each year stating the amounts Gross/DIRT/Net and this is what you should be using to complete your return.
 
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