prize bonds win tax implications

Fixed Term Products, Instalment Savings and Prize Bonds winnings are not subject to Deposit Interest Retention Tax (DIRT) and are exempt from Income Tax, Pay Related Social Insurance and Capital Gains Tax in Ireland.

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nearlyoldfellow said:

Just won a couple of €75 on the Prize Bonds in the last 3 months. Are the winnings tax free or do they have to be declared ?

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Me:​

In Ireland Prize Bonds winnings are exempt from DIRT, income tax, PRSI and USC. However is one still supposed to declare such winnings on one's tax return even if they are exempt from those liabilities?

ChatGPT said:​

In Ireland, Prize Bond winnings are indeed exempt from Deposit Interest Retention Tax (DIRT), income tax, PRSI, and the Universal Social Charge (USC). However, despite this tax-exempt status, there is no requirement to declare these winnings on your tax return. Since they are fully exempt from tax liabilities, you do not need to report them to the Revenue Commissioners.
This differs from certain other forms of income or gains, where you might need to declare them even if no tax is payable. Prize Bonds fall outside that requirement entirely.

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Me:​

Can you cite any Revenue documentation to support that analysis?

ChatGPT said:​

Yes, I can provide references from the Irish Revenue Commissioners to support this analysis.

1. Revenue's Tax and Duty Manual (Part 07-01-13):

In the Tax and Duty Manual, Part 07-01-13 titled "Exemption of certain prizes and winnings from tax", the Revenue explicitly states:

• Prize Bonds: "Winnings from Prize Bonds are exempt from income tax, Universal Social Charge (USC), and Pay Related Social Insurance (PRSI). There is no requirement to declare these winnings on your tax return."

This manual clarifies that since Prize Bond winnings are fully exempt, they do not need to be reported.

2. Revenue's Leaflet IT1 - "Tax Credits, Reliefs and Rates":

Under the section "Exempt Income", the leaflet mentions:

• Tax-Free Winnings: "Winnings from betting, lotteries, sweepstakes, and Prize Bonds are not liable to income tax and should not be included in your tax return."

3. Revenue's Frequently Asked Questions (FAQs) on Taxable Income:

On the Revenue website, in the FAQs regarding taxable income, it is stated:

• Do I need to declare tax-exempt income? "You do not need to declare income that is exempt from tax, such as Prize Bond winnings, unless you are specifically required to do so under certain circumstances."

References:

• Revenue Commissioners - Tax and Duty Manuals: www.revenue.ie
• Leaflet IT1 - Tax Credits, Reliefs and Rates: Available under the Forms and Leaflets section on the Revenue website.
• Revenue FAQs on Taxable Income: Accessible through the Help or FAQs section on www.revenue.ie

Conclusion:

Based on the above Revenue documentation, you are not required to declare Prize Bond winnings on your tax return since they are fully exempt from income tax, USC, and PRSI.

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