Batt O'Keeffe
Question:30 Mr. B. O'Keeffe asked the Minister for Finance his views on the fact that depositors in credit unions will be forced to pay DIRT. [11546/97]
Written Answers. - Credit Union Deposits.
Shares and deposits held with credit unions are not subject to deposit interest retention tax. However, dividends and interest paid by credit unions are chargeable to income tax in the hands of the recipients at the rates relevant to those recipients, including the higher rate where appropriate. Individuals are obliged to report such income in their annual tax returns to the Revenue Commissioners.
In addition, sections 226 and 227 of the Finance Act, 1992 provide for the automatic return to the Revenue Commissioners of certain information from financial institutions where they pay deposit interest without deduction of tax. In 1992 the Revenue Commissioners issued a statement of practice to the effect that returns by financial institutions need be made only of amounts paid or credited in excess of £500. This means that credit unions are obliged to make a return to the Revenue Commissioners where the amount of deposit interest paid to the depositor in the year exceeds £500.
The Deputy will be aware that the Finance Bill, which was passed yesterday by the House, contains no amendments in regard to credit unions. I am conscious of the very significant developments in this area and in particular the recent passage of the Credit Union Bill, 1997 which updates the legislative framework within which credit unions operate. I have no proposals to change the tax regime applying to credit unions savings but, of course, it will be necessary to keep the position under review in the light of these developments.