Prsi extended

Brendan Burgess

Brendan Burgess

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PRSI

The contributory state pension is one of the key benefits funded by PRSI contributions and it represents, together with other PRSI benefit payments, excellent value for money. This is especially so for those on the lower part of the income distribution, those with shorter contribution histories, and also the self-employed. The reality is that the PRSI contributions are progressive and redistributive because people at the higher end of the income distribution generally get back less than they pay in.

In order to ensure the stability of the Social Insurance Fund so that it can continue to pay the pensions and the benefits that those earning the least are so reliant on, there is a need to broaden the income base for PRSI. My colleague Minister Burton will be increasing the minimum level of annual contribution from the self-employed from €253 to €500 and abolishing the weekly allowance for employees. Both of these measures will make a fairer link between the amount of contributions and the significant benefits received.

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.
These changes in PRSI are progressive as they ensure that all sources of income are now subject to PRSI.
 
PRSI For self-employed

"Increase to the minimum level of annual contribution from the self-employed from €253 to €500."

Does this mean I just pay an extra €247 a year or is it more complicated?

Why minimium level? I don't understand this could it be more? Is it my choice to pay more depending on something?

Can someone give me an idea how to calculate this based on some example figures?

Thanks.
 
Someone with income of €6,000 pays €253 in 2012 (6,000 x 4%) = €240 but min is €253.

In 2013 the payment will be €500. It will affect people with income below €12,500.
 
Does the exemption limit apply for self employed earning below 5K? Has there been changes to this?
 
Joe_90 said:
Someone with income of €6,000 pays €253 in 2012 (6,000 x 4%) = €240 but min is €253.

In 2013 the payment will be €500. It will affect people with income below €12,500.
Click to expand...

Thanks very much Joe_90 that explained it perfectly.
 
PRSI for rental income

Is the PRSI tax applied to the rental income minus all or any of the rental expenses (75% of mortgage, expenses to upkeep of property etc.)?

Thanks
 
Don't have major issue with PRSI changes to be honest, what I do have a problem with is those who have never contributed anything still getting benefits albeit means tested. Know three families none of whom have EVER worked (officially anyway) and get all benefits.
 
rent a room relief income

Would income earned under rent a room relief be considered unearned income subject to PRSI?
 
Will public servants who pay a very low PRSI rate now be hit with the standard PRSI rates?
 
This is what applied prior to yesterdays Budget from the welfare website .."If you are no longer liable to pay Class S PRSI (for example, if you stop being self-employed or if your income falls below the €5,000 limit) and you are under age 66, you may apply to become a voluntary contributor"

If you are unemployed and in receipt of a social welfare payment, and some rental income and deposit interest, what would have been the PRSI liability prior to yesterdays budget? Would you be considered Class M? Thanks
 
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cork said:
Will public servants who pay a very low PRSI rate now be hit with the standard PRSI rates?
Click to expand...

There is no mention of that in relation to PRSI paid on salary. What is proposed is a 4% PRSI rate on other income earned from a profession or trade, or from unearned income from Jan 2013.

Any public servant who joined after April 1995 is paying full rate PRSI anyway so there are a reducing number of those on modified (reduced) rate.
 
So as a nonresident landlord , I will have to pay PRSI on rental income. Fair enough - does that mean I will get PRSI credits for that time, so when we move back to Ireland in a few years we would be entitled to state pension for that time , or maternity benefit or unemployment benefit?
 
joeryan said:
"Increase to the minimum level of annual contribution from the self-employed from €253 to €500." Does this mean I just pay an extra €247 a year or is it more complicated?

Why minimium level? I don't understand this could it be more?

Is it my choice to pay more depending on something? Can someone give me an idea how to calculate this based on some example figures? Thanks.
Click to expand...

Joe_90 said:
Someone with income of €6,000 pays €253 in 2012 (6,000 x 4%) = €240 but min is €253.

In 2013 the payment will be €500. It will affect people with income below €12,500.
Click to expand...

Further to the above exchange, can anyone explain the implications (if any) of this change to someone with an ARF, please.

I have an ARF from which I withdraw €8,000 per annum to supplement my small pension. This €8,000 is the maximum that I can withdraw without having to pay PAYE at 41% on my withdrawals.

PRSI at Class S (4%) is deducted from my ARF withdrawal, and, up to this year, this annual PRSI deduction (amounting to €320) was reckonable for State Contributory Pension purposes.

However, in the light of Budget 2013, it appears that my annual PRSI deduction is too small to be reckonable for Contributory Pension (assuming that the minimum annual Class S contribution applies to people with ARFs.)

This leads to a possible scenario whereby my ARF manager might have to deduct the full €500 Class S PRSI contribution from me, regardless of the amount that I draw from my ARF in 2013.

Can anyone advise me what the correct situation is, please?

My specific questions are:

1. Will my 2013 Class S deduction of €320 be reckonable for Contributory Pension purposes even though it's below the set minimum?

If not,

2. Will my ARF provider have to deduct a minimum of €500 from my ARF in 2013 and following years?

if not

3. Will I have to 'top up' my annual PRSI deduction by paying a voluntary €180 to the DSP in order for my Class S contribution to be reckonable for Contributory Pension purposes?

Muchas gracias.
 
Suppose I gave up a job to pursue other interests and am now earning zero and not claiming any social welfare benefits or assistance. To pay voluntary PRSI contributions would cost 6.6% of reckonable income in the previous tax year. If I earned €100k last year that would be €6.6k. But if I register as self-employed I can earn zero and pay a voluntary PRSI contribution of €500. Or, if this zero income is questionable, I have no problem earning, say, a token €100 from consultancy and declaring that. Is there anything illegal or otherwise problematic about this scenario?
 
According to Jill Kirby on Sean o'Rourke show on tuesday prsi is payable on the gross rent not net after exps.
 
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