Q&A

I have received a pre-approved confirmation from Bank of Ireland for its Gold Advantage card. When do I have to cancel my existing AIB Visa card to ensure that I do not incur the Government stamp duty? Is it assessed on cards in ownership at the beginning of a calendar year?

Credit cards

Ms H.N., Dublin

Strangely, although stamp duty was only extended to all bank cards last year, the Minister did not take the chance to harmonise the dates with the new calendar tax year. I guess a January date at last year's budget would have started a panic for banks at one of the busiest times of the year for them and for retailers.

There is an outside possibility that he will tamper with the scheme this year to stop the inequity of people transferring cards being hit with a double whammy. In any case, it would be no surprise if he moved to align the tax period with the calendar year that applies on almost everything else.

For now, though, the relevant dates are April 1st and March 31st. The tax year for bank card duty kicks in on April 1st, so you must make sure your existing card is fully cancelled by then or you will face a charge. Equally, you should not activate your new account before April 1st. I'd check with the banks to make sure you leave enough time so that there is no crossover. Then you can sit back and do without plastic for, oh, up to two weeks, I'd guess. Some system.

ARFs

I am contributing into an additional voluntary contribution that is managed by Irish Life. Upon retirement, my personal pensions savings must be put into an Approved Retirement Fund. Can you inform me what monetary limits are in force for an ARF?

Mr D.G., Co Meath

The situation used to be that the bulk of your pension savings had to go into an annuity, which provided an income during your life but generally nothing thereafter. Annuity rates varied widely, depending on the market at any given time.

Following legislative changes since 1999, people with personal pensions, including the new Personal Retirement Savings Accounts, or making additional voluntary contributions (AVCs), can put this money into an Approved Retirement Fund (ARF) instead.

The first thing is that you are entitled to take up to 25 per cent of the fund as a tax-free lump sum on retirement. Thereafter, the balance goes into an ARF.

ARFs are managed by a "qualifying fund manager" - a bank, building society, insurance company or credit union - and money within them can grow free of income tax or capital gains tax.

Income tax at your marginal rate is paid on any money you withdraw from the fund but the balance invested continues to grow. The tax is paid directly to the Revenue by whomever is managing the fund.

A further advantage is that money held in such ARFs remains part of your estate following your death.

The important figures in relation to ARFs are that, if you are under 75, you must have a guaranteed income for life of at least 12,697 a year. This can include state social welfare benefits but not those that are paid for dependants.

Alternatively, you can hold 63,487 in an Approved Minimum Retirement Fund (AMRF), a close relation of an ARF, or use the same sum to buy an annuity.

AMRF funds can be accessed once you reach the age of 75.

Dividends

The last two dividends I have received from Kingspan (including the special dividend paid last June) have been paid without deduction of withholding tax. The warrant states: "This dividend is a distribution within the meaning of section 141 of the Irish Taxes Consolidation Act 1997." Could you please advise me as to what this means? Do I still have to return the payment and pay tax or is the payment tax-free?

Ms D.K., email

I have checked with the company and the registrar and the only thing I am certain about is that you would not be receiving dividends with no withholding tax deducted unless you asked for such a facility.

Kingspan did apparently ask the registrar to issue letters, called section 141 notices, to its shareholders offering them the choice of receiving their dividends with no tax deducted. If this is completed and returned, the shareholder will be paid gross. Unless you have taken that action, Computershare, the registrar, assures me withholding tax will have been deducted.

For those who are receiving their dividend without any deductions, you do still have to pay tax, assuming you are liable to income tax. This should be done by way of your annual return. Even if there had been a mix-up, you are always liable for your own tax affairs.

Residence

At the bottom of your reply "Residential SSIA rules", you mention a foreign income tax exemption of 3,000. I rang the tax office (both PAYE and self-employed) and no-one knows of this exemption. The only exemption they were aware of was for more than 90 days abroad and more than 11 days in any country. Could you please give me a reference for this 3,000 exemption so I can track it down?

Mr D.M., email

The wording of last week's piece might have been a bit clumsy but it is accurate nonetheless. As it happens, it erred on the cautious side. What it said was people who are ordinarily resident are taxable in Ireland on all their worldwide income except:

a token €3,000 a year;

any income earned abroad for work carried out wholly abroad.

As it happens, the specific allowance figure is 3,800 a year.

I cannot quite understand why the tax office should have such a problem finding the information as it is in the Revenue's own explanatory booklet on working abroad. The booklet Going to Work Abroad: A guide to Irish income tax liability based on some commonly-asked questions was prepared by the Commissioners' residence section in January 2002.

On page five, it says that people who are ordinarily resident here but not resident in the State for tax in that given year are "exempt from tax on:

n income from a trade, profession, office or employment, all the duties of which are exercised outside Ireland; and

n other foreign income, e.g. investment income, provided it does not exceed 3,810 in the tax year in which it is earned."

You can probably get a copy of the booklet at your local tax office. It is available online at www.revenue.ie and you can always email a copy to that tax office.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice.