DIRT and higher rate taxpayer?

A

alexcoll

Registered User
Messages
24
Does DIRT fully satisfy tax liability on deposit interest for higher rate taxpayer?
 
Hi

No additional tax but you still have to pay the prsi and levies

dbran
 
Thanks for useful info. Obviously Revenue will deduct the levies.
Anybody know how do you pay the PRSI; I thought it only applied to wages and salaries?
 
Why and how do you think Revenue will deduct the levies?

If you send in a Tax return then all taxes (PAYE/PRSI/levies) will be dealt with. Otherwise Revenue have no mechanism to deduct the leveies from the Deposit Interest.
 
I am still unsure about the liability for PRSI on deposit interest. Isn't it associated with employment? Would PRSI also be payable on dividends and capital gains? The levy situation is straightforward - it applies to all sources of income.
 
Income subject to DIRT is exempt from the income levy.

See page 3 of the "Income levy- Frequently asked Questions" document at the end of this page from the Revenue.ie website

[broken link removed]
 
alexcoll said:
I am still unsure about the liability for PRSI on deposit interest. Isn't it associated with employment? Would PRSI also be payable on dividends and capital gains? The levy situation is straightforward - it applies to all sources of income.
Click to expand...

callybags said:
Income subject to DIRT is exempt from the income levy.

See page 3 of the "Income levy- Frequently asked Questions" document at the end of this page from the Revenue.ie website

[broken link removed]
Click to expand...

Deposit interest subject to DIRT is, as mentioned above, exempt from the Income Levy, however it is not exempt from PRSI or Health Levy in the hands of those liable to PRSI and Health Levy.
 
Thanks for info and links. The levy position re DIRT now completely clarified - what about PRSI? Also does the levy apply to Capital Gains?
 
alexcoll said:
Thanks for info and links. The levy position re DIRT now completely clarified - what about PRSI? Also does the levy apply to Capital Gains?
Click to expand...

PRSI is chargeable in the hands of those with sufficient income to be liable to PRSI. However if you have exceeded the PRSI ceiling through, say, PAYE income you may find that PRSI is not charged.

Capital Gains are not income and do not come within the remit of the Income Levy. However share option gains ( being chargeable under Income Tax ) are liable to the Income Levy.

A comprehensive guide to the Income Levy is on Revenues site.

www.revenue.ie/en/practitioner/law/income-levy.pdf
 
I've been looking at the Dep of Social and Family affairs website because I'm still intrigued by this question of PRSI and Health Levy on Deposit Interest

Quote:
Who Pays PRSI?

With very few exceptions:

  • all employees, whether full-time or part-time, and
  • self-employed people with a minimum annual income (see SW 14 for details) who are aged 16 or over, are liable for Pay-Related Social Insurance ( PRSI) contributions.
PRSI contributions

The PRSI contribution, normally payable by employer and employee, is a percentage of the employee's reckonable earnings (i.e. gross pay less superannuation and Permanent Health Insurance contributions, deducted under a net pay arrangement by the employer, which are allowable for income tax purposes).


http://www.welfare.ie/EN/Topics/PRSI/Pages/prsiexp.aspx
 
Whether PRSI applies to deposit interest will depend on whether you are an employee or self employed. If you are self employed (with a sufficient level of income) PRSI applies and will be due as part of your income tax payment under self assessment for the year.

If you are a PAYE employee you are whats called an "excepted self employed contributor" and will not be liable to PRSI on unearned income including deposit interest.

This exception for employees does not apply to the Health Levy. However, my understanding is that unless a tax return is filed by the PAYE employee due to level of non-PAYE income, Revenue do not seek to recover the health levy amount.
 
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