The following is from a presentation I gave at Alan Moore's Tax and Wealth seminar in 2019
Joe and Mary are aged 71 and each have State Pension income of €12,000pa and rental income of €10,000pa
They have €500,000 to invest for income
Assuming a yield of 2% this will generate additional passive investment income of €10,000pa
Rank the following funds in order of suitability for Joe and Mary
US or Canadian dividend income and ROS for personal investments
The tax credit allowed under the US or Canadian/Ireland double tax agreement is 15%.
Therefore, when including the dividends on the ROS return there is a specific box for the US or Canadian dividends under the foreign income section. There are two boxes under this section for Canadian tax dividends -one for dividends where Irish encashment tax is also suffered on the payment and one for dividends where there was no Irish tax deducted from the payment. The gross amount of the Canadian dividends should be entered in the relevant box and the ROS return will automatically allow a 15% tax credit in line with the double tax agreement.
This 15% tax credit is allowable against income tax and USC but it cannot be offset against PRSI (the same as the credit for US tax).
Therefore, if the individual had an effective Income Tax rate of less than 15% the excess withholding tax can be used against USC.
NOTE No credit is given for DWT in a gross-roll up fund or Pension. The DWT credit is lost and has the effect of an additional cost for investors
Note Luxembourg has a DWT rate of 30% with the USA whereas Ireland has a 15% rate. This is why the JPM fund has a relatively high effective rate of tax
Marc Westlake
Chartered Certified and European Financial Planner
www.globalwealth.ie
Joe and Mary are aged 71 and each have State Pension income of €12,000pa and rental income of €10,000pa
They have €500,000 to invest for income
Assuming a yield of 2% this will generate additional passive investment income of €10,000pa
Rank the following funds in order of suitability for Joe and Mary
US or Canadian dividend income and ROS for personal investments
The tax credit allowed under the US or Canadian/Ireland double tax agreement is 15%.
Therefore, when including the dividends on the ROS return there is a specific box for the US or Canadian dividends under the foreign income section. There are two boxes under this section for Canadian tax dividends -one for dividends where Irish encashment tax is also suffered on the payment and one for dividends where there was no Irish tax deducted from the payment. The gross amount of the Canadian dividends should be entered in the relevant box and the ROS return will automatically allow a 15% tax credit in line with the double tax agreement.
This 15% tax credit is allowable against income tax and USC but it cannot be offset against PRSI (the same as the credit for US tax).
Therefore, if the individual had an effective Income Tax rate of less than 15% the excess withholding tax can be used against USC.
NOTE No credit is given for DWT in a gross-roll up fund or Pension. The DWT credit is lost and has the effect of an additional cost for investors
Note Luxembourg has a DWT rate of 30% with the USA whereas Ireland has a 15% rate. This is why the JPM fund has a relatively high effective rate of tax
Marc Westlake
Chartered Certified and European Financial Planner
www.globalwealth.ie
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