The National Solidarity Bonds consist of two elements. On maturity, the bonds attract a lump sum payment that does not form part of income as estimated in accordance with the Tax Acts and is, therefore, exempt from income tax and universal social charge and from the charge of PRSI. Annually, a payment of interest is made to the bondholder and deposit interest retention tax (DIRT) is deducted. Interest, which is liable to DIRT, is specifically excluded from the charge to universal social charge. However, PRSI may be chargeable on such interest depending on the circumstances of an individual.
In addition, I announced in my Budget speech last December that Minister Burton will be bringing 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; and unearned income for everyone else will become subject to PRSI in 2014. This means that PRSI will be payable on such income generated from wealth such as rental income, investment income, dividends and interest on deposits and savings.
Furthermore, I would point out that, in general, social insurance applies to persons over the age of 16 years and under pensionable age, which is currently age 66 years. Those aged 66 years and over are not liable to pay PRSI on any of their income including their unearned income. Accordingly those over 66 years will not be impacted by the proposal to apply PRSI to unearned income such as interest on savings, shares and rents.