DIRT & PRSI on Savings Accounts

I'm guessing this would have to be deducted at source (is this even possible?).

This has to be considered:
-Nearly everyone has a savings account subject to DIRT if not multiple savings accounts i.e. old ones that they never bothered to close but may still be earning a few euros / cents in interest net of DIRT.
-The sheer diversity of the people who have savings accounts e.g. kids who have had savings account(s) opened for them by their parents to people who regularly save from their salary.
-The majority of the working force which are PAYE are fairly clueless regarding filing tax returns, most wouldn't even know where to begin or would be quite apprehensive about it.
-If everyone has to file a Form 12 for all their accounts which are subject to DIRT then I don't see how Revenue will be able to cope.

If it's going to work it will have to be straightforward, efficient and minimum effort required by those paying it (wasn't DIRT set up to be deducted at source otherwise people just weren't declaring it?). Otherwise this is going to turn into one huge mess.
 
MysticX - I share your logistical concerns. The reality is that a lot of people will not declare deposit interest. The Revenue will only go after those with large deposit interest. They are not going to go chasing a kid who made a few quid in deposit interest.

Daddy said:
If An Post State Savings exempt there will be a massive shift of monies to the State Savings.
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Completely agreed. However, the NTMA/DoF are under huge pressure from the banks to lower State Savings rates. I would think that some cuts in State Savings rates are on the way.
 
Agree that reductions are on the way. Filled my boots this over last weekend and again this morning. Is it certain that prsi does not apply to certs and bonds.
 
Re: PRSI on State Savings
NTMA said:
Interest earned on Savings Bonds is exempt from Deposit Interest Retention Tax, Income Tax and Capital Gains Tax in Ireland and is not returnable as income to the Revenue Commissioners.
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From this it seems to me that State Savings interest could be subject to PRSI. PRSI is not mentioned in the list of exemptions in the above quote and is a social insurance payment to the Dept of Social Welfare rather than a tax payable to Revenue. Therefore I think that PRSI could be charged on State Savings interest and the above quote would remain valid.

Personally, I would be delighted if State Savings interest is not regarded as "income" as it could be very important for some of my relatives. Their State Savings (certs and bonds) interest puts them over the threshold for the over 70s medical card as of today. They have already moved some money to non interest bearing accounts and I have been asking on AAM whether moving money to prize bonds could help with the situation. My thinking is that maybe prize bond prizes do not count as "income" for the means test. I think this is clutching at straws though.
http://www.askaboutmoney.com/showthread.php?p=1302086
 
Interesting quote especially "not returnable as income to the Revenue Commissioners" which I would think would suggest that it is not subject to PRSI. In 2014, surely, the Revenue will collate PRSI collection on unearned income as part of filled returns.

Also, the list mentions "income tax", PRSI, like USC is especially an income tax.

I asked a tax expert today about this. His take was also that State Savings income is normally 'untaxable income' and as such will not be subject to PRSI.

So, most likely, State Savings now offer DIRT free rates, PRSI free rates and high interest rates. Now might be the right time to grab the long dated State Savings rates before the inevitable cuts to these rates come. If I was running a bank, I would be demanding that the NTMA cut rates immediately.
 
state savings

The current rate is 5.04% on the 5 year 6 months certs if was subject to Dirt @ 30%.

would the new rate be if prsi @ 7% and Dirt @ 33% 6.725% AER. It would be hard for banks to bet. I see a major tranfer of funds from banks to NTMA.
 
How much can a person earn (Post-Budget) before becoming liable for PRSI ? And how does "Unearned Income" (Deposit Interest) fit into that ?

DIRT covers the Tax liability so just PRSI.
 
think i'll start spending my savings hardly worth keeping it on deposit anymore. 40% is the final straw for me this government have screwed me for the final time!
 
Greekwife said:
The PRSI change for Deposit Income is from 2014

Taken from the Minister's Speech:

"Minister Burton will also bring forward legislation to change PRSI contributions as follows:

Where modified PRSI rate payers have income from a trade or profession, such income and any unearned income they have will be made subject to PRSI with effect from the 1st of January 2013.
Unearned income for everyone else will become subject to PRSI in 2014. This means that PRSI will be payable on income generated from wealth such as rental income, investment income, dividends and interest on deposits and savings."

http://budget.gov.ie/budgets/2013/FinancialStatement.aspx#section10
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Is this basically saying that it applies to self-employed from 01/01/13 and to everyone else from 01/01/14?
 
irbx said:
The current rate is 5.04% on the 5 year 6 months certs if was subject to Dirt @ 30%.

would the new rate be if prsi @ 7% and Dirt @ 33% 6.725% AER. It would be hard for banks to bet. I see a major tranfer of funds from banks to NTMA.
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PRSI could be zero, it could be 7%, it could be 10%. It varies.

It will be 2014 before we need to factor in PRSI for comparable grossed up rates :) As PRSI rates vary depending on your income, it would be difficult to factor into grossed up rates.

My first step is to confirm the new grossed up rate for the 10 year State Savings product for 2013.
 
username123 said:
Whats the difference between the two? Is it based on when the interest is paid out?
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36% applies to any savings account that does not pay interest at least one a year. Very rare that this happens. Most term deposits, even over 1 year, pay interest at least once a year.
 
let me get this right i am a public servant and i get paid weekly in which i pay my income tax, usc charge, prsi. i also have an income from a foreign property that i get once a year of which i pay usc charge in income tax but not any prsi.

so if i save money from my paye job in which prsi is already paid will i be charged prsi again on this money when its put on deposit.

Now i can imagine that prsi could be chargeable towards my foreign property money would it be the case that the unearned income would be from this money alone??

and number 2 the money i have already in the bank is from years of saving from my p.a.y.e. job surely there not going to charge me prsi again on this money already in the bank . maybe someone can clarify this
 
seánieboy said:
let me get this right i am a public servant and i get paid weekly in which i pay my income tax, usc charge, prsi. i also have an income from a foreign property that i get once a year of which i pay usc charge in income tax but not any prsi.

so if i save money from my paye job in which prsi is already paid will i be charged prsi again on this money when its put on deposit.

Now i can imagine that prsi could be chargeable towards my foreign property money would it be the case that the unearned income would be from this money alone??

and number 2 the money i have already in the bank is from years of saving from my p.a.y.e. job surely there not going to charge me prsi again on this money already in the bank . maybe someone can clarify this
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They will not be charging PRSI on the money you have in the bank, rather on the interest that money earns by having it on deposit in the bank.
 
CiaranT said:
MysticX - I share your logistical concerns. The reality is that a lot of people will not declare deposit interest. The Revenue will only go after those with large deposit interest. They are not going to go chasing a kid who made a few quid in deposit interest.
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We always had this wink and a nod approach to taxation of savings on the part of Revenue, institutions and individuals - CU shares/deposits being the main one up to recent years. Those who happened to fall into the self assessed category (and not necessarily self employed) had to stump up while others paid nothing even when they were liable.
 
seánieboy said:
.. the money i have already in the bank is from years of saving from my p.a.y.e. job surely there not going to charge me prsi again on this money already in the bank . maybe someone can clarify this
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Money in a deposit account is some residue of taxed iincome. Interest earned on this money has, for many years, been subject to tax (DIRT). Now they want to levy PRSI on the same interest earned.

The principle of a tax on money already taxed has been established for many years.

Though, with interest on demand deposits at 0.1%, or less, DIRT/PRSI payable will not amount to much for many.
 
PRSI is an insurance you pay to provide you with benefits, right? So if I get charged prsi on my deposit interest what benefits do I get? Presumably this is not counted as a contribution for the purposes of going toward pension benefits for example assuming I have no other taxable source of income and not getting a prsi contribution any other way.
 
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