Q&A

DOMINIC COYLEanswers your personal finance questions...

CAN I OFFSET LOSS ON PRSA?

QI had an underperforming PRSA with Bank of Ireland, which I have cashed in by transferring it to an ARF in another company. As the transfer value was less than the total contributions paid into the PRSA can I offset the loss in any way?

– Mr M C, WESTMEATH

A Personal Retirement Savings Accounts (PRSAs) are a private, portable pension for those with irregular working profiles or whose employer does not provide a pension option. In general, the tax most relevant to any pension saving is income tax. Money paid into a pension is deducted from gross pay without deductions being made for income tax, PRSI and the health levy. When you draw down the pension, you pay income tax at your relevant marginal rate. There is no provision to allow an offset to investment losses in a pension fund or similar investment. If you had acquired the shares that would be in your PRSA directly, you would own the asset, the share, and so would get some offset relief under the capital gains tax regime but this does not apply to pension funds.

DO I NEED TO DO TAX RETURN?

Q Is it necessary to send in a tax return if my income is below €20,000 a year? I am a widow with a small part-pension from the UK and am retired and over 70. I have savings, which I do not take an income from.

– Ms A McM, DUBLIN

A My understanding is that you are obliged to make a return only if you have a liability to income tax and that liability extends beyond any income that is taxed under the PAYE system. An exception to this is in where the Revenue sends individual notice of a requirement to make a return.

You are over 70 and, as such, have an exemption from income tax on the first €20,000 of your income. You state that your income is below this level.

In relation to your savings, you state that you take no income from these.

If you are talking about bank savings, you should not even be liable to deposit interest retention tax (Dirt) on these given that you are over 65 and your income is below the income exemption limit.

Because of this I do not see that you are obliged to make an income tax return.

WILL GUARANTEE SCHEME CONTINUE?

Q I have heard and read several references recently to the ending of the Government guarantee that was given in September 2008.

What will the situation be after September 30th of this year? Is the guarantee likely to be extended?

– Mr J S, e-mail

A The initial blanket guarantees extended by the Government do expire on September 29th this year.

The Government did recently introduce what it calls an “Eligible Liabilities Guarantee” (ELG). As the name suggests, it is not the same blanket scheme as its predecessor. However, in practical terms, the effect should be the same for savers.

The Eligible Liabilities Guarantee will cover deposits over the value of €100,000 with any institution registered with the National Treasury Management Agency, which oversees it. Deposits below that level are already covered under a separate Deposit Protection Guarantee.

This column is a reader service and is not intended to replace professional advice.

Please send your queries to Dominic Coyle, Q&A,  The Irish Times, 24-28 Tara Street, Dublin 2. E-mail: dcoyle@irishtimes.com