Clarifying DIRT, USC and prsi on deposit interest

The Minister has just clarified it on the Today with Sean O'Rourke programme

USC will not apply to Deposit Interest

Prsi at 4% will apply from 1 January 2014.

So the tax rate on deposit interest will be

Dirt: 41%
Prsi| 4%
Total 45%

Brutal! From 30% before 2013 budget to 45% after 2014!

So hundreds of thousands additional people need to file a tax return also?

How will the PRSI be collected ?

Does the threshold of €5,000 pa before you are liable for PRSI still stand ?

Greekwife said:

How will the PRSI be collected ?

Does the threshold of €5,000 pa before you are liable for PRSI still stand ?

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According to this piece in today's Indo 'The Department of Finance has clarified that anyone with income of over €3,174 from rent and savings will have to pay PRSI (pay=related social insurance) on the interest.'

http://www.independent.ie/business/...ith-savings-and-rental-property-29670170.html

So it's a threshold of €3,174 (does this mean €6348 per married couple?) at which you are liable for PRSI on savings.

Am I right in thinking that the 4% PRSI won't count as a contribution for social insurance entitlements? It doesn't have a contribution class, and indeed calling it PRSI seems to be a misnomer. If all your income was from deposit interest, you'd still have to make a separate voluntary PRSI contribution if you wanted pension entitlements?

I find this situation very confusing.

I have been paying PRSI forever on my deposit interest. That is because I file returns as well as having some PAYE income. So no change there.

If the Minister has flagged some change from Jan 14 it must be to PAYE people who haven't been filing returns.

45% tax on deposit interest implies savings certs APR of 2.2% tax free is equivalent to 4% deposit interest, so savings certs back in pole position.

Duke of Marmalade said:

I find this situation very confusing.

I have been paying PRSI forever on my deposit interest. That is because I file returns as well as having some PAYE income. So no change there.

If the Minister has flagged some change from Jan 14 it must be to PAYE people who haven't been filing returns.

45% tax on deposit interest implies savings certs APR of 2.2% tax free is equivalent to 4% deposit interest, so savings certs back in pole position.

Click to expand...

Is it because you are a "chargeable person" under the definition of having a certain amount of income from non-PAYE sources? Those sources are about to include deposit interest whereas previously they didn't.

I have been filing returns for years also, and have never had PRSI charged on top of deposit interest.

P.S. Still wondering if anyone can confirm my earlier suspicion that this PRSI charge won't count as a contribution for entitlements purposes.

Will PRSI apply to persons over 65? from deposit interest?

People over 65 don't pay PRSI so no is the answer.

To be clear.

The age exemption from DIRT is 65 or over if you have income below a certain threshold.

The age exemption from PRSI is "government pensionable age" which is currently 66. Hence, you have to be 66 or over to be exempt from PRSI. At some stage in the future, this will be 67.