Hi,
I'm a 44 year old who has invested directly in Rabodirect's investment fumds via this site. I have approx. €50,000 in the funds as was using them as a vehicle for saving for my retirement. My question is am I better off investing the money in a series of one off contributions over the next few years to the newly launched PRSA account to avail of the tax relief and growth potebtial to realise a better return on my money?

If you are happy to keep investing in Rabo investment funds for your retirement then you certainly should be taking advantage of their new PRSA pension account and fill it with your pension investment – for the simple reason that you can then collect tax relief, subject to limitations, for every fund contribution you make. Now this assumes that you are not already fully funding – and collecting tax relief – on any other pension you might have – say an occupational scheme, an AVC or another Revenue approved private retirement contract. If you do qualify to make pension contributions into a PRSA, your contributions will be limited according to your age. At age 44 you can contribute up to 25% of your total net relevant earnings up to €150,000 per annum at your top rate of income tax. If you pay 41% tax and 6% of PRSI, you can claim 47% tax and PRSI relief against your contributions, making your pension a very attractive investment indeed. There’s a lot of talk about what is going to happen to pension tax relief (and maybe even the tax free lump sum you can take out of your final fund at retirement) but until this happens you might as well be collecting whatever relief is still available.

Finally, you can read all about PRSAs on the Pensions Board website where they publish a very useful guide – see www.pensionsboard.ie and follow the links to PRSAs.

Hi Jill,


I am a new customer; I have invested a small amount of my savings in the Investment Funds on Rabo. According to the website the capital gain tax is 28%, I take that is whatever profit I made on Robo Investment in current tax year, 28% goes to the Revenue, right? In the past a few year, has the capital gain tax always remains 28% or there were ups and downs?? Can you forecast next year or even in the next few years, is government going to increase the percentage of the gain tax? Are we going to get better return on our investment by investing long term or short term? Only from the capital gain tax point of view. Thank you!

You’re quite correct: the 28% deduction is an exit tax on the profits you earned on any profits that accrue from your Rabo investment funds when you sell them. This tax has been something of a moveable feast for the Government; I can remember when it was much higher in accordance with the higher rates of tax we paid. In the 2000 Finance Act the exit tax was set in accordance with the standard income tax rate plus 3%, which was also the rate that was set that year for DIRT on deposit income and capital gains. This exit tax has now gone up twice in the past year in line, this time, with the increases in DIRT and CGT which is now 25%. Will the government increase these wealth taxes? If I was a punter, that would probably be a pretty safe bet. The government is still borrowing nearly €500 million a week to meet its day to day expenditure and savings are up amongst those people still in employment who are deeply worried about their future incomes and security. Since the exit tax is only deducted when you encash your fund, and DIRT is deducted annually, it might be a wise move for anyone who doesn’t need access to cash to consider shifting it to an investment fund. Finally, tax shouldn’t be a deciding factor in whether you invest over the short or long term. But if it is, you should also make sure that any short term investments carry the lowest costs and charges possible.

Can you tell me if PRSI needs to be paid on rental income or is it just income tax and health levy

Once you deduct all the tax relief and allowance from your rental income – expenses such as your mortgage interest, insurance, wear and tear and maintenance, etc you are left with your rental profit, and it is against this that your tax, levies and PRSI applies. If you aren’t sure what you can claim, either speak to your inspector of taxes or a tax advisor.

I was working in the UAE for 6 months last year when I relocated there. Am I liable to pay taxes in Ireland for monies earned whilst living there? (for the "foreign income" section) Thank you

Generally, Irish residents are liable to Irish income tax on worldwide income and non-residents are liable to Irish income tax on income they earn here. You are only considered a non-resident if you are both not a resident or ordinarily resident in Ireland; that is, that your permanent residence is in another country and you do not spend fewer than 183 days a year here (and not just for a single six month period while working abroad.)

Double Taxation Agreements (DTA) between Ireland and other countries, however, mean that you don't end up paying tax twice on the same income.

In your case, if you only worked in the UAE for six months last year and were (and are) still a resident here for tax purposes, then your UAE income would be subject to Irish income tax. Currently, the UAE is one of a number of countries with which the Irish Revenue has been negotiating a DTA, and it says it is expected to be signed shortly. In the meantime, there is provision for possibly granting you unilateral relief for a number of tax charges you may have been subject to in the UAE, like withholding tax on dividends or DIRT tax on deposits.

With the file and pay deadlines looming October 31st if you file a hard copy return and November 16th if you file on-line with www.ros.ie - you might want to consult a tax advisor to ensure you are compliant.

Hi,
In 1989 my wife & I took out an endowment mortgage based on a plan from Standard Life. I realize that the revenue are taxing the gains from such Products. MY question is will the tax only affect the gains made since the tax law changed. Also is there any relaxing of the tax when the proceeds are to pay a mortgage on one's primary residence. Thanks.

Have a small amount to invest and just wondering what's the best account to put it in. Trying to forget about this money as wont need it until my son is going to college in 6 years time so your adnvice would be much appreciated. Regards Mo

The real question you need to answer is how much risk are you willing to take with this money that has been earmarked for your son’s education. You can leave it in a safe, top-yielding deposit account and have a pretty good idea of what it will be worth in 2015 (give or take inflation) or you can invest it for six years in the hope that it comfortably beats a deposit return. One way to mitigate risk is to leave a portion of the fund on deposit and invest the rest. Rabo clearly ranks each of its investment funds according to risk, as do most other fund providers. Read the fund syllabus carefully before you choose the one that you think suits your need for the money in six years and your risk comfort zone. Don’t forget too that all charges apply whether the fund makes a profit or not in any given year. This is going to take a little time and effort but it will be well worth your while doing so. We all need to take ownership of our investment decisions.

In the UK married couples now automatically combine their nil-rate inheritance bands on the death of the first person. When the second member of the couple dies, twice the nil-rate band at the time is applied to the remaining estate. Could you advise please if the same applies here in the republic? Many thanks.

Inheritance rules are very different here from the UK. In Ireland, capital acquisition tax (CAT) is the liability of the beneficiary, not the deceased person’s estate as it is in the UK. Transfers between spouses does not attract any inheritance tax here, and child (or grandchild if the parent is already deceased) can inherit up to €430,400 tax free before paying 25% CAT on the balance. The tax free threshold falls with the linear relationship and siblings, aunts and uncles and cousins can inherit €43,400 before tax applies and if you are a ‘stranger’ - that is, not a blood relation – you can only inherit €21,700 tax free.

Can I switch my AVC fund from my employer sponsored group scheme to Rabodirects PRSA and if so what are the issues involved? Thanks

UK dividends always include a note TAX CREDIT.....this is of no benefit in Irish Income Tax return??

Hi Jill
Planning on going overseas for health treatment (better and cheaper than here) so was wondering if I can still claim the consultant expenses through MED1 form?

So long as the overseas (which for this purpose includes Northern Ireland) consultant or practitioner doctor or dentist is properly registered and qualified in their home country, the treatment qualifies under the Revenue’s rules, and you cannot claim it against an existing health insurance policy, then you can claim the 20% standard rate tax relief on the expense. You can check for details here: http://www.revenue.ie/en/tax/it/leaflets/it6.html. Routine dental or opthalmic treatment does not qualify but there is a long list of expenses which are covered on the Revenue site.

I have an AVC to put into an ARF. Irish Qualifying Fund Managers all insist in charging 1.25% of the capital sum per annum. They are only been asked to put it in a savings account. The charge overblown and typical of Irish financial industry. Do you know how I can do it cheaper?

Dear Jill,
I'm in receipt of a state pension(retired public service). My wife, who is deemed to have no income availed of the government top-up of €2500.00 when her SSIA matured about 2 years ago by investing in a pension scheme. Despite the fact that the the monthly premiums to this scheme are being paid from my pension, I'm advised by the revenue that I'm not entitled to any tax relief on these premiums on the basis that my pension is not earned income. Is this correct?. If so, when the pension matures and my wife decides to draw down on the full capial rather than purchase an annuity,based on the fact that we got no tax consessions on the premiums paid, will she be liable for tax on this?
Regards O. Gray

Hi Jill,
heard Mr Hobbs discussing "European inflation Bonds" - what are they are where can I find out more about them - and more importantly whats your opinion on them?

Hi Jill,
I've invested a small amount in 3 rabo investment accounts. Of the 3 only one has made a profit. Do I need to submit a Form 11 to Revenue for the interest on the one investment account thats in profit? I've no intention of selling the shares in any of the investments accounts at the current time. Is it only on exit from the account that you become liable for tax on income from off shore funds? Many thanks A. Byrne

Hi,gill,
i have ten thousand euro to invest.I dont really need it for the next 5 years ,do not know what to do with it.Would love some help.

Hi Jill
if i cash in shares in profit and re invest all or some do i have to pay tax on shares and how much time do i have to reinvest thanks Jack

How much can I put in my children's Rabo account before the interest is taxed (i.e. after DIRT)? My wife and I are jointly assessed and the interest we earned in the last year on our individual Rabo accounts was taken into consideration when calculating our taxable income, but our children's interest amounts were not. Thanks.