Kevin Humphreys (Dublin South East, Labour)
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To ask the Minister for Finance if credit union dividends will be subject to PRSI in 2014; if they are classified as unearned income; and if he will make a statement on the matter. [56215/12]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Department of Social Protection that, in general, credit union dividends come within the definition of ‘reckonable income’ and accordingly are subject to PRSI at 4%. In the case of employees who do not have any self-employed earned income but who do have unearned income, including credit union dividends, that unearned income may, currently, not be subject to PRSI. With effect from 2014, this exemption from PRSI applying to employees with only unearned income (other than wages/salary) is being abolished. This will mean that credit union dividends which had previously not been subject to PRSI, will become subject to the charge of PRSI.

Kevin Humphreys (Dublin South East, Labour)
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To ask the Minister for Finance the reason the announcement in his 2012 Budget statement that the base for PRSI would be broadened to cover rental, investment and other forms of income in 2013, has been pushed back until 2014; if it is possible to bring it forward to the coming year; if it is further possible to collect it from September 2013; and if he will make a statement on the matter. [56273/12]

Michael Noonan (Limerick City, Fine Gael)
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I announced in Budget 2013 that the PRSI base will be broadened to cover rental, investment and other forms of income from January 2014. The Deputy will be aware that the Revenue Commissioners collect PRSI and this is then transferred into the Social Insurance Fund. In the case of self-employed people, the PRSI is collected through Revenue’s self-assessment system and is already charged on all income, including unearned income.

Employees PRSI are collected through the PAYE system. Employers deduct the relevant contributions from earnings and remit them to Revenue.

The Deputy will note that the PRSI base has been broadened and that where a PAYE taxpayer (including a modified rate PRSI contributor from 1 January 2013) is also carrying on a trade or profession, that taxpayer will pay PRSI on all his or her income, regardless of whether it is earned or unearned.

After 1 January 2013 the only persons who will not be paying PRSI on unearned income are PAYE taxpayers who are not carrying on a trade or profession. At present, the PRSI liability for such individuals is dealt with wholly within the PAYE system. Collection of PRSI on unearned income through the PAYE system, particularly in relation to interest which has attracted Deposit Interest Retention Tax, would not be feasible without knowing the amount of the income involved in the case of each individual taxpayer. Since most PAYE taxpayers do not file a return at present, there is no way of knowing or estimating their interest income for 2013. Therefore, it is not possible to effectively implement a PRSI charge on unearned income for these taxpayers from 1 January 2013. However, I have confirmed in the Budget statement that PRSI will apply to those taxpayers from 1 January 2014. This will allow time for the Revenue Commissioners, in consultation with the Department of Social Protection, to consider how best to implement this change and the operational aspects of collecting the charge. Since the income involved is likely to be annual in nature, it would not be feasible to introduce a change part way through the tax year.