Jill Kerby

FF from Dublin writes: I have a personal pension fund in addition to my employer's. When I claim tax relief on my contributions to this fund can I include my PRSI contributions as well? 

You may be entitled to claim relief from the total PRSI and health levies of 6% of your net relevant earnings on your contributions which would result in total contribution relief of 47% if you pay tax at the higher, marginal rate and 26% if you pay tax at the standard rate. Pension contribution/PRSI tax relief is restricted however, and is based both on an age-related percentage of net relevant earnings/remuneration and on a total earnings/remuneration figure of €275,236 in 2008 and €150,000 in 2009.  This generous tax and PRSI relief may not last forever, so you should ensure that you’ve claimed it all up to this current tax year.

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TL writes from Dublin: I recently lost my job in the media. I have been thinking about writing a book for some time and this might be just the opportunity (I’m trying to stay positive). Just wondering how I could apply for the artist’s tax exemption status and when it applies - only from when you get a book published, or sooner? If sooner, can I get the exemption status while I am researching and writing my novel?

Under Section 195, Taxes Consolidation Act, 1997, income earned by writers, composers, visual artists and sculptors from the sale of their works is exempt from income tax in Ireland, but only under certain circumstances, according to the Revenue Commissioners. (Certain literary non-fiction works are also considered exempt.) The key features that you need to fulfill to the Revenue is that your work “is original and creative and whether it has, or is generally recognised as having, cultural or artistic merit” and that you, the artist, “must be resident, or ordinarily resident and domiciled in the State and not resident elsewhere.”   You are also exempt from paying any income tax from any bursaries or grants you might receive from the Art Council, or even an advance payment from a publisher, for example, to help support you as an artist, but only in the year in which you make the claim and only after you achieve your tax exemption status from the Revenue.  Any income earned from your work before you are given your artist exemption status will be liable to income tax.  The Revenue have full details of this scheme on their web-site, www.revenue.ie . Finally, while this may not affect you immediately, since January 2007, artistic income is regarded as a "specified relief" and may be affected by something called High Income Individual Restriction which takes into account various tax reliefs that higher income earners use to reduce their income tax liability. The restriction will only apply to those individuals whose "adjusted income" is over €250,000 per annum. 

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MB from Dublin writes: I received my annual Christmas bonus this year which was in the region of €60,000. I plan to spend €10,000 on home improvements would like to put the rest away for about six months. Could you tell me where I would receive the best return over a six to 12 month period? I don't mind if it is locked away and inaccessible for that period. 

Interest rates are coming down as the ECB lowers its base rate and savers will find their annual yields will come under even more pressure in 2009 due to the extra 2% Dirt (now 22% instead of 20%). While you naturally want to maximise your return, a quick glance at the ‘best buy’ interest rate charts in this newspaper and on the interest rate website, www.irishdeposits.ie shows that Anglo Irish Bank, Irish Nationwide, and the EBS are offering some of the highest six and 12 month fixed rates.  At time of writing their long term futures were still being determined by the government.  I suggest that before you go for the highest return on your money, that you are equally satisfied not just about the return of your money at the end of the fixed term but that the institution you leave it with is still around then too. 

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PB writes from Limerick: I have €19,000 on deposit with National Irish Bank and I'm wondering what to do after January 1, when the rate of interest drops to just 1% from the 5% I’ve been receiving since reinvesting my original SSIA fund in the NIB tracker deposit account. Can you advise me of how I might earn a better return? I might consider risking a portion of it, in the hope that any losses I might incur would be covered by the return earned by the portion I leave on deposit. I like the idea of forestry, but it seems to me that you have to wait ages to make a return. I'm very sceptical about stocks and shares though I’ve read that the best time to invest is when values are low. I invested in a tracker bond in the past but made very little money - and that was when times were good. I'm also wondering which is the best deposit account at the moment. Your Best Buys tables lists Anglo Irish Bank as one of the best but, after the scandals that have emerged recently, would my money be safe?

You’ve already given quite a lot of thought to this process and have come to some sensible conclusions: the security of the bank you choose for the funds you want to leave on deposit is just as important as the return you are offered on your money and also that when a global market collapse happens, bargains will be available among those strong, well capitalised companies with little or no debt, that pay dividends despite falling share prices.  There are also sectors and funds that should produce good returns over the longer term – like energy and other natural resources (including timber and water), consumer durables, food and infrastructure companies that will be able to take advantage of the massive building projects governments intend to pursue as part of their national stimulus plans. You should start doing your own research and compare the cost of different funds (check out the RaboDirect.ie and Quinn-Life.ie investment funds) and low cost ETFs (exchange traded funds) that represent these sectors. The Irish Stock Exchange has just dropped its charges on its new selection of ETFs (see www.ise.ie) and is also a good place to start.