Q&A on pensions, property and more
Mr L McK writes: I have just spent £3,000 sterling on dental treatment in Newry. Will I be able to claim the dental tax relief?
Yes you can. A qualifying dental treatment attracts tax relief at your standard income tax rate of 20%.
It also applies to qualifying medical treatments, which is why many people who do not have health insurance but have savings, or who do not want to wait so long for treatment here decide to go abroad for less expensive treatment and then claim their 20% tax relief. You just have to fill out a Med 1 or Dental form Med 2 and submit it to the Revenue. (See www.citizensinformation.ie)
Ms MB writes: Can money be withdrawn from a credit union like it can from a bank at short notice. Is the interest rate lower? Does it remain secret or is it declared to the State like the banks do?
So long as your deposit is not secured against a loan, you can withdraw some or all of it without advance notice, though every credit unions sets its own credit and lending terms. Some allow just €1,500 withdrawals a day, others less or more, so check with your local union. You may only have to give a day’s notice.
Interest is paid in the form of a savings dividend: many credit unions are paying no dividend or very tiny dividends (maybe 1%) mainly due to their level of bad debts and because, like the banks they are not lending as much as in the past. Again, ask about their dividend history.
From January 1, 2014 all credit union share dividend and deposit interest paid to members is subject to 41% DIRT with the exception of dividend or interest paid to members who are exempt from DIRT (certain people over aged 65 and certain people who are permanently incapacitated).
Before 2014 certain types of credit union accounts were not subject to DIRT. DIRT exemptions can be arranged for you (if you qualify) by the CU on your behalf with the Revenue; all DIRT is paid automatically to the Revenue.
Mr JM writes: When the owner of an Approved Retirement Fund dies and the fund is passed to his dependents, are they taxed?
Approved Retirement Funds is a post-retirement investment vehicle for mature pension funds held mostly by self-employed people, proprietary directors and an increasing number of members of occupational defined. The ARF option means that you don’t have to buy a poor value annuity-based pension income but can draw down an income or capital from the ARF as you need it. (The government requires you draw down at least 5% of the fund each year – 4% from next year.)
There is no tax payable on a deceased person’s ARF if the ARF itself transfers to the spouse at death or he/she encashes it. This is because all transfers/inheritance between spouses is tax-free. Children under 21 who inherit an ARF pay no income tax on it (that would otherwise apply in the year the holder dies) but they will pay 33% inheritance tax. A child over 21 who
inherits an ARF pays income tax due but no inheritance tax.
Check out this link – http://www.davyselect.ie/customer-service/faq-arf.html
Scroll down to “What benefits are payable on Death”.
Ms LM writes: I am married, 61 and hope to retire in May 2016 or July 2016 after 40 years service as a radiographer. My pension will be about €25,000 after all deductions- it won’t be enough to stretch to all our expenses. Is it correct that Portual is a good place to retire to as it does not charge income tax on pensions? My husband will retire officially next year and get his old age pension.
Two EU countries do not tax pension income – Portugal and Malta – (Australia is another) because pension fund contributions are paid with after tax income and the pension income at retirement is tax-free. Our system works in the reverse.
The only way retirees from Ireland can avail of claiming their pension funds tax-free is to be a tax-resident in these countries and to have moved their pension funds to them before they retire and claim their income (usually as PAYE earnings). Malta has already been the destination for some companies and individuals who have moved their active pension funds in order that the tax-free status (and higher tax-free lump sums in Malta’s case) becoming available to retired members but there have been recent reports that the Revenue Commissioners are intervening, despite a previous success court case. Someone who becomes a tax resident in these countries can also then also be paid their old age state pension tax-free and not be charged tax by their new country’s tax authorities.
Anyone who wants, or thinks, they might be able to ‘genuinely’ retire to these pension tax exempt countries (‘genuine’ is the Revenue’s requirement) should get specialised, tax and financial advice. I have passed onto you the names of some companies that work with ex-pat retirees.
If you have a personal finance question for Jill, please email her at firstname.lastname@example.org or write to her at Jill Kerby, The Munster Express, 37, The Quay.
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