Terence Flanagan (Dublin North East, Independent)
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71. To ask the Minister for Finance the position regarding PRSI for a sole trader (details supplied); and if he will make a statement on the matter. [47677/14]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that the general rule that applies to sole traders is that income tax is charged on the full amount of the profits of the person's trade or profession arising in the tax year in question.  The exact calculation of the income tax that a sole trader may be liable for in any tax year is based on the total amount of income received for the year in question, and the amount of tax credits and reliefs due to the person.  In this regard, Revenue records indicate that the person concerned is in receipt of a pension. Should he also have an additional income by way of profits from sole trading, that additional income would appear to be liable to income tax.

The Universal Social Charge (USC) is a tax payable on gross income, including notional pay, after any relief for certain capital allowances, but before pension contributions are deducted. Self-assessed taxpayers, including sole traders, have responsibility for operating the charge in respect of all income sources. USC is not payable where an individual's combined income does not exceed €10,036 for a tax year. This threshold will increase to €12,012 from next year.  However, where this amount is exceeded, USC is payable on the full amount.  Full details in relation to the rates and operation of USC are available in a series of Frequently Asked Questions on USC from the Revenue website at .

Pay Related Social Insurance (PRSI) is collected by the Revenue Commissioners on behalf of the Department of Social Protection. All self-assessed taxpayers, including sole traders, aged 16 or over and under pensionable age (currently 66), with reckonable income or emoluments of €5,000 or more per year, are liable for PRSI at the Class S rate of 4%. For the purposes of determining whether an individual exceeds the €5,000 threshold, the rules which apply to income for taxation purposes also apply to income for PRSI purposes, before deduction of "capital allowances", as defined in the Income Tax Act of 1997. Full details in relation to the operation of PRSI are available in a series of Frequently Asked Questions on PRSI from the Department of Social Protection website at .

Should the person concerned require further clarification on these issues he may contact Mr Kevin Midleton, at his local Tax District: North City/City Centre Revenue District, 14/15 Upper O'Connell St. Dublin 2. telephone 01-8894554, who will be happy to assist him.