Is OAP taxable taking into account deposit interest?

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callybags

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The scenario is as follows: (Sample Figures)

Married couple - both over 70

Income: Old Age Pension €14,000
Deposit Interest(dirt paid) €100,000

I understand that the DIRT tax paid on the deposit interest is the only liability on this income.

Because the interest received puts their total income over the exemption threshold, is there a liability on the pension income?

If there is, can their allowances and credits be off-set against this liability, or are they deemed to be already used against the interest received?

Hope i have made myself clear.

Thanks
 
DIRT is the only tax liability but there may be PRSI (not in their case as over 66 ) and Health Contribution liabilities to be considered.

One's Standard Rate Cut off Point is increased by the interest amount so that only standard rate tax computes and one then gets credit for the DIRT paid. In the scenario as you described, there could actually be a refund of DIRT as the pension income is less than the available tax credits would cover leaving an excess. I put those figures you quoted into ROS offline for 2008 and it came up with a refund of €3,340. Using €14,000 pension €100,000 gross Dep int, split 50/50 between them, personal credit €3660, PAYE credit (against pension) of €1,830 & Age Credit of €1,650. The tax liability comes out at €16,660 and DIRT is €20,000 leaving an overpayment, which once they are over 65 is refundable.
 
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