Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

Self-assessed taxpayers have an additional annual return filing obligation compared to those who pay their taxes through the PAYE system. Individuals who are predominantly PAYE taxpayers but who earn a small amount of other non-PAYE income do not at present automatically move into the self-employed system, provided their net other income does not exceed €3,174. It is taken into account in determining the tax credits and standard rate cut off point for the year or it is fully charged to DIRT tax. The Revenue Commissioners may also take into account the individual's gross income from non-PAYE sources in deciding how they should be treated. Currently, Revenue set the threshold at gross non-PAYE income of €50,000, above which a person comes within the self-assessment system. The kinds of income in questions are rents, deposit income, dividend income and so on

Up until 2014, this limit of €3,174 was set on an administrative basis by the Revenue Commissioners, but with the enactment of legislation at that time extending PRSI to unearned income by self assessed individuals, it was necessary to put the limit on a statutory footing.

PAYE taxpayers remain exempt from PRSI on non-PAYE income up to the €3,174 limit. I am proposing in section 12 to increase the €3,174 figure to €5,000 from 2016 onwards. I should emphasise that the income concerned is and always has been liable to tax. This measure will have no effect on tax yield because the liability of the income to tax remains unchanged. It has been estimated that this change will cost approximately €3 million in PRSI foregone. Revenue intends to reduce the current gross unearned income figure from €50,000 to €30,000 at the same time, however, and this is expected to have a mitigating effect on that overall cost. There are benefits to the taxpayer and to Revenue from this proposed change. It will be possible to remove the annual return burden from a larger number of taxpayers with low levels of non-PAYE income. It will also be easier for Revenue to collect the tax on that income.