Vol. 547 No. 1
445 Mr. Creed asked the Minister for Finance the impact on the PRSI exemption limit of the shorter tax year in 2001; if this was adjusted to take account of the shorter tax year; and if he will make a statement on the matter. [2518/02]
The shorter tax year had no impact on the PRSI exemption limit in 2001. PRSI allowances and thresholds are calculated on a weekly basis and therefore, have been unaffected. A weekly, non-cumulative PRSI free allowance of 127, £100, per week applied to employees' social insurance contributions in classes A, E and H in any week that reckonable earnings exceeded 287, £226. A similar allowance of 26, £20, applied for those in classes B, C and D. Employees covered under classes A, B, C, D, E and H with reckonable weekly earnings of not more than 287, £226, were exempt from paying PRSI for that week.
The Deputy may refer to the employee PRSI contribution ceiling of 35,870, £28,250, for 2001. When annual earnings are in excess of the relevant contribution ceiling, employees have a period in each contribution year in which no contribution is due, sometimes referred to as the PRSI holiday, the duration of which depends on the level of annual earnings and the point in the tax year at which the earnings ceiling is reached. Up to now, PRSI holidays tended to be concentrated mainly in the first quarter of the calendar year in the lead up to the end of the tax year on 5 April. Prior to the decision to align the tax and calendar years from January 2002, relevant employees could have expected a contribution holiday in the first quarter of 2002. Arising from this alignment their contribution holiday will be deferred until the final quarter of 2002. Although the contribution ceiling was left intact for the short tax year these employees will continue to have two PRSI holidays over the two year period from 1 January 2001 to 31 December 2002, as they would have had prior to the changeover, although the second holiday period will now occur mainly in the final quarter of 2002.
