What happened prior to DIRT for a tax compliant person.

[lazing]

I understand that DIRT kicked in from 1986 (www.revenue.ie/en/practitioner/tech-guide/dirtgns0106.doc) but what tax would someone have been paying from 1970 to 1986?

The reason I want to find out is that I am trying to work-out what could have been saved since 1970 and still be complying with tax on the estate of a deceased individual.

For example:
- In 1970 he had £5000 savings in 1970.
- Based on his business, it's not unreasonable that he could have added c. £1000 extra savings each year thereafter.
- I use a 5% bank interest return each year (In my actual work I was going to use the rates from the revenue: [broken link removed])
- From 1986 the DIRT would have been paid automatically, but what should he have been paying before then?

Much appreciated.

 

[WizardDr]

Interesting.

Interest was paid gross up to 1986, with the exception of Building Societies who paid a composite rate. My understanding is that the composite rate discharged one's tax liability. I will have to check if one was obliged to return it and I would say tentatively yes.

As regards bank interest credited to accounts prior to 1986, this was always liable at your marginal rate of tax as indeed were credit union dividends and both these would have been under Case III.

The Non Resident Accounts interest did not get returned by the Bank in any return that the Bank or branch of the bank were asked to return by the Revenue. This interest was gross.

The Resident Accounts Interest (the majority) were always subject to taxation at your highest marginal rate.

The Banks could be asked by Revenue either branch by branch by an Inspector of Taxes to make a return to him under s175 of the Income Tax Act 1967 of any distribution paid by way of interest that exceeded I£70. Some customers closed their accounts before year end and er did not get included.

If you wanted to find out just how much interest was actually returned under Case III, the answer is very little. You could ask your TD to put down a parliamentary question, and this will cause consernation in Dublin Castle. In other words, what you have highlighted is in fact a far larger taxation evasion scheme than existed for Non Resident Accounts.

 

[lazing]

Thanks for the reply. I am thinking the easier approach for me is to use an post savings bonds as my benchmark because presumably they would been net?