Return on Deposit Account

C

Cowpat

Registered User
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Hi,
Apologies if posted before but I did search without luck and I'm sure it's probably a simple calculation.
Assuming that a single 53-year-old employee who is paying top rate tax decides to invest 90K in a 2-year CA Autobank (no withholding tax) @2.96% - what is the actual Euro return on the investment after DIRT, USC and PRSI after the 2 years? TIA
 
No compounding on that fixed rate account so the gross return should be €90,000 @ 2.96% = €2,664 p.a. x 2 years = €5,328.
You are liable for DIRT @ 33% = €1,758
If you are liable for PRSI @ 4% then that's = €213
USC is not chargeable on deposit interest on which DIRT has been paid.

So the return net of DIRT is €3,570
And if you are liable for PRSI it's €3,357

There may be better deposit options available:

Best Buy - Savings Best Buys

Savings Best Buys: There are 3 savings best buy threads on AskAboutMoney that are updated frequently. Instant Access and Notice Accounts - Lump sum variable rate savings. Fixed Term Deposits - Fixed Lump Sum Term Deposits from a few months to a few years. Regular Savings - Smaller sum...
www.askaboutmoney.com
Plus the rate on that account may be due to fall with yesterday's ECB rate cut.
Finally, putting such a large amount on deposit for a few years may or may not be the most prudent thing to do but that really depends on your overall financial and personal circumstances.

E&OE
 
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@ClubMan's response looks good in response to the question asked and the named bank.

There is a related point regarding the timing of reporting and paying the DIRT and PRSI liability which may be of interest to other users browsing this thread.

In terms of crediting/paying interest, the banks which Raisin partners with operate interest in one of two ways:
Interest is Credited and Paid at Maturity. CA Autobank, among others, operates in this way.
Interest is Credited Annually and Paid at Maturity. I know that Younited, TF Bank, Nordax operate in this way and there may be others.

For the first group, the interest is reported and DIRT/PRSI paid in the year the deposit matures. For the latter the the interest must be reported and DIRT/PRSI paid annually, even though the interest cannot be accessed until maturity.
 
I hope it’s okay to ask a related question regarding Clubman’s information on deductions.

PRSI on Fixed Term Deposit Account. I’m considering B of Ireland 18 month deposit.

We were considering a joint account but my wife is still liable to PRSI where as I’m no longer liable to it due to age.
I receive the State Pension now.

Would it make more sense to open it in my name only ?
 
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