Revenue Pension Review

Revenue is currently comparing the pension information received from DSP with the return of income Form11 for individuals who received a DSP pension payment in 2010 and prior, with a view to identifying those
Read the rest of this entry »

Tags : , ,

Tax liability for Pensioners?

It’s hard to believe how Revenue can get something like this so wrong, but they have. 115,000 letters have being dispatched to pensioners resulting in 20,000 worried pensioners contacting the Revenue helpline on Friday and Saturday past, with phone lines expected to be ‘busy’ again today when they reopen. So how did Revenue get it so wrong?

The fact is, in the vast majority of cases, no additional tax arises. So why were letters issued at all to these pensioners? The fact is, Revenue should have done their analysis and then issued any letters necessary.

I have being contacted by numerous pensioners over the past few days who showed me the Revenue letters they have received. Had it not being the fact that I am an experienced tax professional, from reading the letter I would have assumed they had a tax liability too! Take one pensioner who approached me with a letter stating that additional tax would be deducted from his occupational pension. The fact is he is tax exempt (less than €36k total income for married couple) so he doesn’t have any tax liability at all!! The letter should have stated that his tax credits and bands will be adjusted accordingly for his occupational pension.

Pensioners with concerns are:
• pensioners with other income of greater than €50,000. Revenue have stated that there are approx. 2,500 pensioners in this category and these will be dealt with on a case by case basis
• self employed (e.g. farmers) who are in receipt of state pensions. These individuals (or their accountants) may have omitted the state pension income in their tax return, and if this is the case, they will be guilty of making a false return.

For these individuals, surcharges / penalties / interest will follow not to mention a possible Revenue audit. They should immediately review their tax return and amend if necessary.

In the following, I have summarised the types of state pensions which are taxable and how they are taxed.
Read the rest of this entry »