Pension payable in Australia due to Irish records
Q&A:I have lived in Australia since 1989 and am in my mid-sixties. For about 20 years prior to that I worked as an employee in Ireland. Am I entitled to anything from the Irish pension system and if so, can you give me an idea of how to start the process?
Mr B O’Connor
The good news is that you are. Apart from arrangements within the European Union to ensure that people secure credit for working in any of the member states, there are also a series of bilateral agreements in place between Ireland and a number of non-EU states. These include Australia.
Essentially, you can get credit in Australia for PRSI payments made in Ireland – at least in terms of assessing your entitlement to a pension on the basis of age, a pension as a widow(er) and disability support.
The agreement was signed in 1992 but there is nothing in the information that I have seen to indicate that service before that date would not be taken into account. On that basis, I would assume you are entitled to claim for the years worked in Ireland.
The first thing you need to do, given that you are based in Australia, is to contact Centrelink. You can do this by phone on +61 3 6222 3455 (you will even be able to reverse the charges if calling in Australian Eastern Standard time), by email to email@example.com or by mail to: Centrelink International Services, GPO Box 273, Hobart TAS 7001, Australia.
Centrelink also operates a website at centrelink.gov.au.
You will need your Centrelink Customer Reference Number – which I gather corresponds with our PPS number and is a unique identifier allocated to each person at birth or arrival into the state. You will also need to give your name and a phone number, complete with area code. Once you have notified Centrelink of your claim, you will need to download Form AUS140IE.1007.
This form, which includes guidance notes, is a claim for Australian pension under the social security agreement between Australia and Ireland.
Investment gift for children
If I sign over an investment property to my children what tax liabilities will they and I have. I do not want the asset transfer to affect their threshold under Capital Acquisition Tax.
Mr O L, email
If you sign property over to your children, it will certainly have an impact on them under capital acquisitions tax . . . but it may not bring them close to a threshold where they will actually pay tax.
You will also face a liability yourself, but under capital gains tax.
Let’s take it in reverse order. You are exempt from capital gains only on your principal private residence. Any other property is seen as an investment and you are liable to tax on the increase in its value from the point of purchase until disposal – allowing for certain costs incurred.
Any disposal counts; it doesn’t have to be a sale, so giving it to your children would trigger a taxable event for you.
As for your children, you are effectively gifting them the property and it therefore will count against their capital acquisitions tax threshold. However, it is worth remembering that the threshold for gifts between parents and children, though cumulative, is still reasonably generous at €250,000.
You don’t say how many children you are gifting the property to but it is unlikely that, in itself, it will take them above the threshold.
Eligibility for medical card
I am looking at my eligibility for over-seventies medical card and refer to your article of last March. If I understand it correctly a married couple with say €122,000 savings would be assessed on €50,000 of this at varying and increasing rates resulting in a total interest of €572.
However, an example given the the Citizens Information website calculates the interest on the excess €50,000 all at a notional 3 per cent giving a total figure of €1,500. Which is correct?
Mr P D, email
Having checked back, we’re both correct. The confusion lies in the fact that the regime is slightly different for people under the age of 70 and for those over that age.
The common feature in both is that the first €36,000 of savings is disregarded for an individual and €72,000 for a couple.
It is only to savings above these levels that interest income – actual or notional – is assessed in a means test.
Below 70, there is a stepped system for assessing the income accruing from savings. Under this notional rate regime, the first € 10,000 over the exemption threshold is deemed to deliver €1 in weekly income. The next €10,000 attracts a notional weekly income of €2 with a rate of €4 a week applying to everything over this amount – ie, in excess of €56,000 for an individual or €92,000 for a couple.
Of course, if your savings are in an investment where they receive actual interest, that actual figure can be used instead of the notional formula. For people over the age of 70, the system is more straightforward. Over the savings threshold, and if actual interest is not there to be assessed, the notional regime applies.
In this case, a single notional rate will be used. Citizens’ Information notes that this rate will be set quarterly by the Health Service Executive on the basis of the average current deposit rates across a number of Irish banks and building societies on January 1st, April 1st, July 1st and October 1st.
The 3 per cent rate you refer to is used in illustrative examples but I have not been able to find any mention anywhere on the internet what the current rate is.
Apparently, it is set by something called the Central Application Unit. But certainly the HSE has not made it easy for compliant consumers to inform themselves of the current applicable rate.
This column is a reader service and is not intended to replace professional advice. Please send your questions to Q&A, c/o Dominic Coyle, The Irish Times, 24-28 Tara Street, Dublin 2, or to firstname.lastname@example.org. No personal correspondence will be entered into.