Under payment of tax by OAP's

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browtal

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I would be grateful if any contributor could give a couple of examples of how O.P. will be effected by todays revelations that they may have been underpaying their income tax.
With no tax reliefs for mortgage etc.

Could you give a couple of examples ie.

Income of a couple

Company pension €18,700
State Pension 22,700
 
Isn't it fairly straight-forward, the pension reduces the tax credits and taxes are re-jigged accordingly? If this is right, use a tax calculator like hookhead to get an idea of the impact.
 
Some of the differences in tax now due are so small that it appears to relate to a figure that Rev determined to be the Soc Wel State Pension in prior years. The figure used for 2012 appears to be 230.30 x52 weeks gross - which is 365 days
Q - will this change in a leap year

Q What is the figure in prior years when there was lesser amount but an additional week i.e. Christmas Bonus 52 and 53 weeks when double payment.
Q - What happens if the figure changes the end of year Dec 31 and Jan 1 is mid week with two different values.
Q - Does the figure change in these circumstances
Finally is there any webpage that shows the actual annual figure that the Rev will use for Contributory State Pension for each year
 
I can't answer any of the questions asked but have one of my own related to this OAP pension issue - maybe this thread could be stickied for all similar questions?

My question is as follows, relatives of mine (a married couple who are jointly assessed) received letters, the man has a public sector pension, the woman has a private pension and half a contributory old pension

I found their tax credit certificates for 2009. For the woman, there is a section which states

Standard Rate Band Reduced By
DSFA Pension 5502

Tax Credits Reduced by
DFSA Pension 1100

But in the section
Allocation of tax credits and standard rate band

The DFSA pension is not mentioned, only the private pension and the spouse's public sector pension are in there

Does it sound like there is a tax compliance issue here?

Now in the 2012 tax credit cert that was received with yesterday's letter the "Standard rate reduced by" DFSA figure is ~12,000. Have Revenue made a mistake and think that she is in receipt of a full old age pension rather than a half one?
 
Hello,
Yes both are over 65 yrs and both have medical card. Both have state and company pension is from husbands employment. Wife has small income from part time work.
Many thanks Browtal
 
browtal said:
I would be grateful if any contributor could give a couple of examples of how O.P. will be effected by todays revelations that they may have been underpaying their income tax.
With no tax reliefs for mortgage etc.

Could you give a couple of examples ie.

Income of a couple

Company pension €18,700
State Pension 22,700
Click to expand...


If this couple has been filling out the relevant tax forms as they are obliged to do, then there is no change. The only people affected are those who have, through deliberate concealment of income or through failure to read documents already provided to them, failed to comply with their tax obligations.
 
@browtal

Standard rate due on all €41,400 x 20% = 8,280
Less Credits
Married 3,300
PAYE x 2 3,300
Old persons 490 7,090
Income Tax due €1,190
 
What is the Annual State Pension Amount for Tax Purposes ?.

Again anyone know what is the figure that Rev used in prior years for Annual State Pension for Tax purposes -


mathematics said:
Some of the differences in tax now due are so small that it appears to relate to a figure that Rev determined to be the Soc Wel State Pension in prior years. The figure used for 2012 appears to be 230.30 x52 weeks gross - which is 365 days
Q - will this change in a leap year

Q What is the figure in prior years when there was lesser amount but an additional week i.e. Christmas Bonus 52 and 53 weeks when double payment.
Q - What happens if the figure changes the end of year Dec 31 and Jan 1 is mid week with two different values.
Q - Does the figure change in these circumstances
Finally is there any webpage that shows the actual annual figure that the Rev will use for Contributory State Pension for each year
Click to expand...
 
For many Older People the example you use is indeed their situation that they got letters about.
Well done wwith your example.
Browtal
 
Do anyone know what is the Annual SW contributory pension for Tax purposes for prior years. For e.g 2011 weekly is the same as 2012 but 2012 has 366 days while 2011 has 365 days.
Revenue is using 230.30 x 52 weeks in their Tax Certs - seem to be ignoring the leap year.
Prior years there were different amounts so what is the figure for the previous four years. Confusion arises because Soc Welfare provided a different annual figure to Rev for tax purposes.
 
mathematics said:
Do anyone know what is the Annual SW contributory pension for Tax purposes for prior years. For e.g 2011 weekly is the same as 2012 but 2012 has 366 days while 2011 has 365 days.
Revenue is using 230.30 x 52 weeks in their Tax Certs - seem to be ignoring the leap year.
Prior years there were different amounts so what is the figure for the previous four years. Confusion arises because Soc Welfare provided a different annual figure to Rev for tax purposes.
Click to expand...

2008 COAP 223.30 PW
2009 COAP 223.30 PW
2010 COAP 230.30 PW
2011 COAP 230.30 PW

http://www.welfare.ie/EN/Publications/SW19_08/Pages/sw19_sect2.aspx

http://www.welfare.ie/EN/Topics/Budget/bud09/Pages/Rates2009.aspx

http://www.welfare.ie/EN/Publications/sw19_10/Pages/sw19_sect2.aspx

http://www.welfare.ie/EN/Topics/Budget/bud11/Pages/bud11s6.aspx
 
The taxation of the State Pension in conjunction with other pension is not as straight forward as it at first appears

EXAMPLE (1)
Mr & Mrs Brown are both age 66. As Mrs Brown was the homemaker she has no pension of her own
Mr. Brown has a full State Pension 230.30 + QA 206.30 = 436.60 x 52 = Total for both 22703.00
Mr Brown also has Occupation of 18700
His tax credits are Married 3300.00
PAYE 1650.00
Age 490.00 = 5440.00

Reduced by 4540.60 & and SRCOP 41800.00 reduced by 22703

Tax payable 2841.00

EXAMPLE (2)
Mr & Mrs White are both 66. Mr. White has a full State Pension 230.30
Mrs. White returned to employment after rearing family. She has a reduced rate of pension @ 225.80. Total for both = 23717

Mr White also has an occupational pension of 18700
His tax credits are Married 3300.00
PAYE 1650.00
PAYE 1650.00
Age 490.00 = 7090.00
Reduced by 4743.44 & SRCOP 52553.60 reduced by 23717

Tax payable = 1393.40
 
After that excellent example from Blacksheep you would wonder why revenue didn't take out large ads in the newspapers and do examples like that for the standard situation so everyone would have a fair idea if we are talking being out by a few quid or thousands.
 
Good Example but its further complicated by marginal relief:
€41,403 - €36,000 = €5,403 x 40% = €2,161 Max Tax

An even more when the exemption was €40,000 in 2010 Max tax €561.
 
Bronte said:
After that excellent example from Blacksheep you would wonder why revenue didn't take out large ads in the newspapers and do examples like that for the standard situation so everyone would have a fair idea if we are talking being out by a few quid or thousands.
Click to expand...

But what is the standard situation?!

Unless someone (being an elderly and not tax savvy person) sees their exact situation and circumstances mirrored in such a notice, they'll probably still be none the wiser, and no more capable of working out their position. My impression is, people in general don't want to know or understand about these issues, they just want everything to be OK!
 
A couple of questions

Widow OAP >70

State Pension 12,688
Deed of Covenant 5,312
Company pension 4,000

Are DoC exempt from income tax and USC ?
If so, is she just liable for income tax and USC on the excess of 18k i.e. 4,000 @20% + 2%
How is this tax levied, is it taken at source or does she have to calculate and send in a cheque to the revenue ?

Cheers
 
Rust Cogs
Hope this helps

Covenants are most effective if the recipient does not have a taxable income. The amount you covenant may be taxable in the hands of the recipient. It is important to note that money covenanted to people receiving a non-contributory pension or means tested allowance may affect their entitlement to the allowance in question
 
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