Taxation
How Your Tax is Calculated
Your tax will be subtracted directly from your salary or wages by your employer. Your employer will then pay this tax to the Revenue Commissioners.
Tax in Ireland is assessed on a calendar year basis (January - December). At the beginning of each tax year the Revenue Commissioners will issue you wil a tax statement.
This statement will show you the level of your tax credits and your standard rate cut off point.
Tax Credits
The amount of your salary on which you do not have to pay tax are known as Tax credits.
Credits are decided on the basis of allowances and reliefts that you will be entitled to – everyone is entitled to a personal allowance, but you can also claim relief on for private health insurance or mortgage relief. Information on these reliefs are available from a leaflet that will accompany your certificate of tax credit.
The Standard Rate Cut-off Point (COP)
You pay your tax at the standard rate of 20% up to your standard rate cut-off point.
Your COP is calculated by the Revenue Commissioners by adjusting your standard rate band (downwards for any non-PAYE income and upwards for any tax reliefs available at the higher rate of tax). Any income above your Standard Rate Cut-Off Point is taxed at 42%.
To calculate out how much tax you will pay after having deducted your tax credits, you should do the following:
Tax all of your income to find your 'gross tax'. Income below the Standard Rate Cut-Off Point is taxed at 20%. Any income above the Standard Rate Cut-Off Point, is taxed at 42%. Take your Tax Credits away from your gross tax. This gives you the amount of tax you have to pay. Example
A single person without children on a salary of €30,000 over a full tax year.
Step 1 - Calculate the Gross Tax on €30,000
€29,400 @ 20% (Standard Rate Band is 29,400 euro and there are no adjustments so standard rate cut-off point is €29,400.00 = €5,880.00
Tax on the remaining €600.00 @ 42% = €252.00
The Total Gross Tax = €6,132.00
Step 2 Tax Payable
Total Gross Tax = €6,132.00
Decuctible tax Credits = €1,580.00
Tax Payable = €4,552.00
The above is based on a full tax year.
It is advisable to check with the Revenue Commissioners to ensure that you are claiming all the Credits that you are entitled to (see Revenue leaflet IT1)
How to apply
For further information on the Pay As You Earn tax system in Ireland, your tax reliefs and rates for 2004, please click here: Revenue (www. revenue.ie) (remember to have your PPS Number handy).
Where to apply:
Your tax will be subtracted directly from your salary or wages by your employer. Your employer will then pay this tax to the Revenue Commissioners.
Tax in Ireland is assessed on a calendar year basis (January - December). At the beginning of each tax year the Revenue Commissioners will issue you wil a tax statement.
This statement will show you the level of your tax credits and your standard rate cut off point.
Tax Credits
The amount of your salary on which you do not have to pay tax are known as Tax credits.
Credits are decided on the basis of allowances and reliefts that you will be entitled to – everyone is entitled to a personal allowance, but you can also claim relief on for private health insurance or mortgage relief. Information on these reliefs are available from a leaflet that will accompany your certificate of tax credit.
The Standard Rate Cut-off Point (COP)
You pay your tax at the standard rate of 20% up to your standard rate cut-off point.
Your COP is calculated by the Revenue Commissioners by adjusting your standard rate band (downwards for any non-PAYE income and upwards for any tax reliefs available at the higher rate of tax). Any income above your Standard Rate Cut-Off Point is taxed at 42%.
To calculate out how much tax you will pay after having deducted your tax credits, you should do the following:
A single person without children on a salary of €30,000 over a full tax year.
Step 1 - Calculate the Gross Tax on €30,000
€29,400 @ 20% (Standard Rate Band is 29,400 euro and there are no adjustments so standard rate cut-off point is €29,400.00 = €5,880.00
Tax on the remaining €600.00 @ 42% = €252.00
The Total Gross Tax = €6,132.00
Step 2 Tax Payable
Total Gross Tax = €6,132.00
Decuctible tax Credits = €1,580.00
Tax Payable = €4,552.00
The above is based on a full tax year.
It is advisable to check with the Revenue Commissioners to ensure that you are claiming all the Credits that you are entitled to (see Revenue leaflet IT1)
How to apply
For further information on the Pay As You Earn tax system in Ireland, your tax reliefs and rates for 2004, please click here: Revenue (www. revenue.ie) (remember to have your PPS Number handy).
Where to apply:
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