Midas is a tax based service and not a regulated financial product. Cornmarket Retail Trading Ltd. is a wholly-owned subsidiary of Cornmarket Group Financial Services Ltd. Telephone calls may be recorded for quality control and training purposes.

Agenda

1. Tax returns

2. Understanding how the PAYE System operates

3. Check your Rate Bands & Tax Credits

4. Maximise your Allowances and Reliefs

5. Sharing Credits

6. Other Taxable Income.

7. Tax Issues at Retirement

Tax Returns

• Am I on the right Point of Scale?

• What is the Standard Rate Cut Off Point (SRCOP) and how does it affect my take home pay?

• What is a tax credit?

• What is my PRSI class – and what does it mean?

• What are the ultimate charges against my Gross pay?

• What impact will voluntary deductions have on my pay?

FAQ’s

How many people here do tax returns?

In 2014, the average tax rebate was €1,300!

82% of PAYE workers overpaid

in tax last year

Source: Midas PAYE customer statistics 2015.

Why Public Sector Employees Overpay Tax

x Not sharing credits and cut-off points in a tax efficient manner

x Not claiming the appropriate tax credits, reliefs, rate bands, etc

x Not availing of all allowances & entitlements

x Tax Credit Certificate details incorrect

x Incorrect allocations accumulate year on year.

Repercussions

Married

Change Job

Agency Work

Income changes

Birth of child

Human error when calculating and deducting tax.

Factors

You can claim back tax for a period of up to 4 years!

Employment

expenses

€€ Salary Protection €€

Tax reliefs/allowances available

Tax Bands incorrect €€

Pension €€

Rent Credit €€Mortgage Interest Relief €€

Irish Historic Income Tax Rates

Source: Revenue

Current rates are 40% + 20%.

30%27%

24%22%

20% 20%

53%

48%46%

44%42% 41%

0%

10%

20%

30%

40%

50%

60%

1990/91 1994/95 1998/99 2000/01 2004 2007

1.Check your

Point on the

Salary Scale

2. Check your PRSI class

(A1 / D)

5. Check your

deductions

4. Should be at least 128 if

PAYE

6. Not taxable

3. Standard Rate Cut-Off point: Should be at least €1,300

The PAYE System

Tax Credit Cert

It instructs your employer on the amount of Tax

to deduct.

If it’s wrong……

YOU PAY too much or too little!

Text “CERT” and your PPSN to 51829 to

get a copy of your Cert.

How to calculate Income Tax

Gross Salary/Pension/Other Income - (PRSI & USC)

Less Superannuation/Pension Levy/AVC/NSP/PHI

= Taxable Income

Apply Rate Bands - 20% & 40%

Deduct Credits

= Income Tax Liability

Check your Tax Credits & Rate Bands

Methods of Assessment

Single Assessment – Taxed as a single person throughout the year and at end of year review.

Separate Assessment – Taxed as a single person throughout the year. Unused credits and rate bands may be transferred between spouses after year end.

Joint Assessment – Taxed jointly throughout the year. Allows flexibility in allocating tax credits and rate bands.

3 methods

Rate bands

• First €33,800 taxed at: 20%

• Earnings over €33,800 taxed at: 40%

2015 example - A Public Sector Employee earning €40,000 pays €9,240 in tax before they apply their credits and €5,940 after applying their tax credits.

Tax credits

The more credits you accumulate, the

less tax you pay.

….they are worth money

and shouldn’t be ignored!

Standard Rate Bands - 2016

Personal Circumstances 2015

Single €33,800 @ 20%

Balance @ 40%

Lone Parent €37,800 @ 20%

Balance @ 40%

Married with one income €42,800 @ 20%

Balance @ 40%

Married with two incomes*

€67,600 @ 20%

Balance @ 40%

*transferrable between spouses, maximum of €42,800 with one spouse.

Married?

Sharing Rate Bands

Married Couple – Earnings Him: €35,000 Her: €55,000

2015 SRCOP (€67,600) Him: €42,800 Her: €24,800

2015 SRCOP (€67,600) Him: €33,800 Her: €33,800

Personal Tax Credits - 2016

Personal Circumstances 2015

Single Person Credit €1,650

Married Person Credit €3,300

PAYE Credit €1,650

Single Parent €1,650

Widowed Tax Credits 2016

Personal Circumstances 2015

Widowed Person €2,190

Widowed Parent (Bereaved in 2013)

Tax Credit in: 2014

2015

2016

2017

€3,600

€3,150

€2,700

€2,250

€1,800

Other Tax Credits

Home Carer - €810*

Incapacitated Child - €3,300

Dependant Relative - €70**

Age Credit - Single €245 / Married €490

*Cannot have an annual income in excess of €5,080.

**Cannot be claimed in conjunction with Home Carer’s Credit.

Maximise your Allowances &

Reliefs

Tax on your State Pension

Since 1st January 2012:

Taxable – Widows/Old Age/Jobseekers

Revenue will deduct your tax credits & rate band by the amount of income received

This will reduce your expected salary from your other pension/employment income

Revenue will review their figures annually.

Exemption Limits 2016 for over 65’s

Personal Circumstances 2015

Single/Widowed over 65 years of age €18,000

Married (over 65) €36,000

Increased by:

1st child

2nd and subsequent child

€575

€830

Marginal Relief 40%

Flat Rate Expenses

Relief at your marginal tax rate

Teachers/Lecturers on full hours: €518

Principals, Professors, Heads of

Schools/Departments: €608

Teaching Council: €90

Part-time Lecturers/Teachers (mainly teaching +

P.E./Guidance Counselling) get an additional: €126

Agreed between Revenue and your Union for expenses incurred directly related to the nature of your employment.

*for a teacher/lecturer on full hours claiming the flat rate expenses tax credit €518.

€207 per year

if you are earning €40,000!*

How much is this allowance worth to you?

Tuition Fees

• Relief for Tuition Fees in approved 3rd Level Colleges

• Primary 2 year+ / Masters 1 Year +

• Ireland and EU based courses

• Limits: €7,000 total fees per person p.a.

• Exemption (per household): – First €2,500 for full time course not claimable

– First €1,250 for part time course not claimable.

Claim relief on your Medical Expenses

1. Make your medical insurance claim (www.hia.ie)Tax relief at source, unless paid by employer.

2. Avail of the Drug Payments Scheme - max €144 pm (www.hse.ie)

3. Apply for your tax relief through Form Med 1.

Qualifying Health Expenses

Doctor, GP, consultant or hospital feesItems or treatments prescribed by a DoctorApproved nursing home fees (40%)Non-routine Dental TreatmentsPrescribed medicinesCertain dietary products, e.g. Coeliac/Diabetic.

***keep the receipts for 6 years***

RentRent Credit• Renting in a private residential property• Must have been renting on 7th December 2010• 2015 Credit:

– €480 if aged 55 or over– €240 if under age 55

• To be phased out by 2017.

Rent a Room Relief Scheme from Jan ‘15• Tax-free income where owner occupier • Maximum is €12,000 per annum including meals, laundry etc.• Must still be declared to Revenue.

Earning more than €3,174

outside of PAYE Income

If you earn more than €3,174 of income from any

source outside the PAYE system you are

obligated to file a return annually.

If you don’t file a return, penalties and late fees

apply.

Other Income

Rental Income

Income - Expenses = Taxable Profits

Example of allowable expenses • Mortgage interest (75%)• Insurance• Mortgage protection• Management Fees• Letting Fees• Repairs & Maintenance• Advertising• Accountancy fees• Painting & Decorating• PRTB• Utility bills• Wear & Tear on Fixtures & Fittings.

Rental Income

Taxpayer’s View

Revenue’s View

Monthly Rental Income €1,000 €1,000

Mortgage repayment / interest

(€1,200) (€720)*

Profit / (Loss) (€200) €280

* Assuming 80% of repayment is interest, restricted to 75% allowable.

Other Income

• Landlord

• Self Employment

• Deposit Interest where DIRT paid

• Foreign Income

• Irish Dividends where 20% tax deducted.

Pay Related Social Insurance (PRSI)

From 1st Jan ‘13, the first €127 is no longer exempt.

• Class D (entered public sector pre 1st April 1995) @ 0.90%• Class A (entered public sector post 1st April 1995) @ 4%• Class M (Occupational Pension) @ 0%

Exemptions & Reliefs: All income is exempt from PRSI from age 66.

Universal Social Charge (USC)

Tax payable on gross income at the following rates from Jan ’16:

• 1% - on the first €12,012 • 3% - on the next €6,656 • 5.5% - on the next €57,376

Self-employed or earning over €70,000:

• USC rate of 8% for incomes in excess of €70,044

Universal Social Charge (USC)

Current exemptions & Reliefs:• Department of Social Protection income• Total income less than €12,012 • Over 70 and salary is less than €60,000 per annum:

USC is capped at 3.5% (reduced from 4%) • Under 70, if salary is less than €60,000 and you hold

a full medical card: USC is capped at 3.5% (was 4%).

Remind me why we should

file regular tax returns?

Age Considerations 20

30

40

50

Multiple Jobs, e.g. Subbing

Rent Relief

Mortgage Relief

AVC’s

Tuition Fees

Pension Contributions

Sharing Credits Parent

Nursing Home Fees

Last Minute AVC’s

CAT/CGT

70

55

60

65

66

Tuition Fees

Parent Nursing Home Fees

1st Spouse Retirement

2nd Spouse Retirement

DIRT Refund

State Pension

PRSI Exemption

Age Credit

Cap on USC

Last Minute AVC’s

Inheritance Planning

CAT/CGT

ARF Distributions

50

Age Considerations

Organising Your Affairs

Request & review your Tax Credit Certificates.

Ensure correct allocation of Standard Rate Band between spouses.

Notify amendments to Inspector.

File Tax Returns annually.

Review previous Tax years.

Make sure you claim for any S & C/training & temporary/marriage gratuity interest and other superannuation deductions.

***Seek professional advice***

Cornmarket Group Financial Services Ltd. is regulated by the Central Bank of Ireland. Cornmarket is part of the Great-West Lifeco group of companies, one of the world’s leading life assurance organisations. Irish Life Assurance plc is regulated by the Central Bank of Ireland. Telephone calls may be recorded for quality control and training purposes.

Warning: Past performance is not a reliable guide to future performance.

Warning: The value of your investment may go down as well as up.

Warning: If you invest in this product you may lose some or all of the money you invest.

Warning: If you invest in this product you will not have any access to your money until you receive your superannuation benefits.

Warning: This product may be affected by changes in currency exchange rates.

Provide you with a way to make

Additional Voluntary Contributions towards your retirement benefits

AVC and PRSAs

Reasons why an AVC/PRSA might make sense

• Early Retirement

• Shortfall in Service

• Service in excess of 40 years service

• Non pensionable earnings (overtime)

• Revenue maximum pension.

Still a very tax efficient way to increase your retirement benefits

Contribution €100

For the typical employee, this means a ‘saving’ each month

of 40%.

Less tax relief € 40(assuming tax @40%*)

NO PRSI rate

(removed in Budget 2011)

Real cost to you for every €100

€ 60

*As of 01/01/2015

How much can you contribute?

Age % Of Salary

Under 30 15%

30-39 20%

40-49 25%

50-54 30%

55-59 35%

60+ 40%Need to be careful

of Overfunding and Personal Fund

Threshold(currently €115,000) IMPORTANT: maximum % of salary contributable is dictated by the

age you turn in that year. Pension Levy is not taken into account when accessing funding limits.

Superannuation Scheme

Spouses’ & Children’s Scheme

NSPs

Purchase of temporary/training years

Repayment of refunded pensionable years/marriage gratuity, etc.

AVC Scheme.

Overall contribution limit takes into account:

Pension Tax Relief limits will not be affected by Pension Levy Contributions.

Issues to be aware of when Retirement Planning1. Public Service Superannuation Act 2004

2. Public Service Pension Reform – “Cost Neutral Early Retirement”

3. Personal tax rates

4. ARF and AMRF options versus Annuity

5. Social Welfare entitlements

6. Tax Relief Scope

7. Standard Fund Threshold (SFT)

8. Personal Fund Threshold ( PFT)

9. Fee, Charges and Commissions

10. Partner Pension Details.

IMPORTANT INFORMATION FOR PUBLIC SECTOR EMPLOYEES

NEARING RETIREMENT

Where a ‘Last minute’ AVC/PRSA may be

worthwhile for Superannuation Scheme

members

Are short service and/or

Have service over 40 years

Have non-pensionable earnings; e.g. exam supervision, correcting of exam papers

Had experienced a reduction in pay.

1. If you are nearing retirement and your Tax-free Lump Sum is likely to be less than the maximum allowed because you:

There is a special tax break under Revenue rules that you might be able to take advantage of before you retire. This is known as a Last Minute AVC.

What is a Last Minute AVC?

It is an excellent way of funding any shortfall in Pension provision between the Tax-free

cash lump sum provided for within the Superannuation Scheme and the maximum

Revenue approved tax-free cash entitlement.

The benefits of investing in a Last Minute AVC include:

• Receiving a refund of tax on Pension contributions

• Maximising your tax-free cash lump sum at retirement.

How does a ‘Last Minute’ AVC work?

• You can top up your tax-free lump sum through a ‘Last Minute’ AVC with a single investment

• You can then claim back full tax relief after retirement (subject to Revenue limits).

Note: you cannot avail of a ‘Last Minute’ AVC after retirement.

Tax-free Lump Sum shortfall of €10,000*

Gross Payment to ‘Last Minute’ AVC

(including charges)

€10, 526

Claim back tax relief @ 40% € 4,210

Actual cost to member € 6, 316

*assumes a 5% contribution charge. Actual charge may differ depending on circumstances. Figures correct as at 01/01/2015.

Dynamisation

• Relevant to all who experienced a reduction in pay

• The calculation of final salary under Revenue Rules differs from Superannuation Rules.

For example, Revenue allows the following calculations:-

Basic Salary (including allowances, etc.) in any 12 month period in the last 5 years.

Plus

Average of 3 or more consecutive years for fluctuating emoluments up to the end of date chosen.

(CPI can then be applied to the above once retirement date is over 12 months).

Do I need to be a current member of an AVC Scheme?

• No, this is open to all members of Superannuated Schemes.

• The process varies slightly but the result is the same – maximising your tax-free cash.

When does the process begin?

The review or consultation must happen in advance of your retirement to ensure that the process is completed before you retire.

How long does the process take?

Usually 6 – 8 weeks.

N.B. The process must be completed in advance of retiring. We cannot guarantee to complete the process if the application

is left too late.

Is a ‘Last Minute’ AVC/PRSA right for you?

No single right answer.

Each individual is different.

Pension planning is COMPLEX.

Expert advice is recommended.

Thank You.

If you need any help with your tax affairs we are available

on (01) 408 4106.

Any Questions?Midas is a tax based service and not a regulated financial product. Cornmarket Retail Trading Ltd. is a wholly-owned subsidiary of Cornmarket Group Financial Services Ltd. Telephone calls may be recorded for quality control and training purposes.