Dáil Éireann Debate, Tuesday - 5 November 2013
411. Deputy Patrick O'Donovan asked the Minister for Social Protection the position regarding people who are 66 years of age or older with regard to charging PRSI on rental income from 2014; if the person is exempt from this measure; and if she will make a statement on the matter. [46210/13]
View answer515. Deputy Stephen S. Donnelly asked the Minister for Social Protection regarding PRSI liabilities on unearned income, as introduced in the Social Welfare and Pensions Bill 2013, if this measure will require those with unearned income to make a self-assessed return to Revenue; if liabilities will be charged on gross or net income, for example, in the case of an accidental landlord with a buy-to-let property, where the rental income does not cover the cost of the outstanding mortgage, either interest only or interest and capital, whether their liabilities will be calculated on income or profits, if any exist; and if she will make a statement on the matter. [46286/13]
View answerI propose to take Questions Nos. 411 and 515 together.
Generally persons between 16 years and under pensionable age are liable to PRSI on all of their different forms of income.
All workers pay PRSI on their earnings from employment or self-employment. In the case of individuals who have more than one income source, PRSI is generally paid on all forms of income. For example in the case of an employee who also has earned income from self-employment e.g. taxi driver, he pays PRSI as a self-employed contributor on the profits from the taxi driving plus on any other unearned income he might have e.g. rental income.
Up to 2013 certain exemptions applied to specific groups. The removal of the exemption in relation to modified rate contributors with income from a trade or profession was introduced in the Social Welfare and Pensions (Miscellaneous Provisions) Act 2013 and the removal of the exemption in respect of employed contributors and occupational pensioners under age 66 years whose only additional income is unearned income is being provided for in the Social Welfare and Pensions Bill 2013.
This means that, with effect from 1 January 2014, unearned income such as rental income, investment income, dividends and interest on deposits and savings of the individuals who were previously exempt, will be liable to PRSI at 4%, provided the person is a chargeable person in accordance with the Revenue definition.
A chargeable person does not include a PAYE taxpayer (i) who does not have other income or (ii) who has an element of other insignificant income that is fully taxed through the Office of the Revenue Commissioners PAYE system (Revenue regard amounts not exceeding €3,174 as insignificant). Individuals with income exceeding €3,174 must pay and file under Revenue’s self-assessing system.
This income will be chargeable at the Class K PRSI rate of 4%. This new PRSI charge will not give rise to any additional social insurance benefits. Individuals may however qualify separately for social insurance entitlements based on PRSI paid on other sources of income i.e. PRSI paid on income from their employment.
In general the rules which apply to income for taxation purposes also apply to income for the purposes of charging PRSI. Therefore the income on which PRSI is applied will, in general, be the same as that for charging of tax.
PRSI is payable by any person over the age of 16 years and under pensionable age who is in employment or self-employment. Generally at pension age a person is no longer liable to PRSI on any income regardless of its source. Accordingly those over pension age who have rental income will not be affected.
