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Irish Pensioners Facing Tax Hit

Monday, January 9, 2012

115,000 Irish pensioners are to be hit by unexpected tax charges after new information came to light regarding inaccuracies in figures held across different government departments.

Following an exchange of information between the Department of Social Protection (DSP) and Revenue, it was discovered that discrepancies existed between the two sets of data held by the separate departments regarding the State pension, the Transition pension (paid to people aged between 65 and 66), and the Widow’s/Widower’s/Surviving Civil Partner’s and Invalidity pensions. Those affected will now receive letters from the Revenue Commissioners detailing their correct tax liability.

If a recipient of a DSP pension has no other sources of income, they are not liable for income tax on the DSP pension. However, if, in addition to the DSP pension, an individual also has another source of income – for example an occupational pension from a former employer – they may be liable to tax on the DSP pension. A person who is 65 years of age or over in 2012 may have a DSP pension and other income sources but may still not pay any tax if their total income for the year is likely to be less than EUR18,000 (USD23,012), if single, or EUR36,000, if married.

According to the Revenue, it would normally have been advised by the taxpayer when they became entitled to a DSP pension. Once advised, the Revenue would have updated its records with the DSP pension details. However, in an effort to explain the issue, the Revenue has claimed that it is likely that over time, some of the changes that have taken place in the amount of the DSP pension paid to an individual would not have been fully taken into account. For instance, the Revenue states that, if a person’s entitlement increased due to changes in their circumstances, but that pensioner failed to advise the Revenue of the revised amount, the Revenue’s records might have fallen out of line with the amounts actually paid by the DSP.

The Revenue has stated that most individuals will not notice any difference in the amount of tax they are paying from 2012 onwards simply because the new pension information supplied to it by the DSP was the same as the details it already held. On the other hand, it admits that others will see an increased tax deduction because the pension figure supplied by the DSP was greater than the figure that was already on Revenue records or because the Revenue had no record previously of that person receiving a pension from the DSP. It is also possible that some taxpayers will see a reduction in the tax they are paying from 2012 onwards where the figure Revenue was using was greater than the actual DSP figure.

In spite of its effort to offer clarification, the Revenue has come under criticism from the Age Action charity. Spokesman Eamon Timmins said: "The letters from the Revenue Commissioners stating that pensioners owe them monies as a result of underpayments going back a number of years, have caused anger among those who received them. The Commissioners are blaming the under-calculation on the fact that a variety of pensions paid were not included by the recipients in the calculation of their personal liability."

"Older people who contacted us today were at a loss as to how one arm of the State did not know what the other arm of the State was paying out. They had presumed these payments had been included. The bottom line is that law-abiding citizens are now left with tax bills at the start of a year when there have never been as many demands on their pensions, and with new taxes and charges to pay. It will cause further hardship for many older people", Timmins stressed.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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