Vol. 544 No. 4
186 Mr. R. Bruton asked the Minister for Finance if he will give details of the tax free thresholds, the rates of tax, the limits on accounts and other conditions which apply in respect of deposit interest retention tax on deposit accounts, credit union share and deposit accounts, special saving accounts and special investment accounts. [29114/01]
The nature of the question lends itself to a written reply in tabular format, which follows:
|
Tax Free Threshold |
DIRT tax rate/Other tax rate |
Limits |
Conditions/Comments |
|
|
Normal deposit account |
None |
20% |
None |
Where DIRT applies, there is no further liability to tax. |
|
Deposit account with deferred return |
None |
23% |
None |
The essence of these “bonds” is that the quantum of interest (or profit, however described) is not quantifiable until the bond has run its course. (Financial Institutions generally offer 3 year or 5 year bonds) |
|
*Credit Union deposit account (existing situation) |
None |
Taxed at the member's marginal income tax rate/will be replaced by 20% DIRT |
None |
Existing arrangements provide for payment of income tax at one's marginal rate of tax on deposit interest. Under the new section 57 arrangements, all interest will be subject to DIRT at 20% as final liability |
|
*Credit Union regular share account |
None |
Taxed at member's marginal income tax rate |
None |
A credit union member has the choice of continuing with the DIRT free status of his or her share account (with consequential liability to income tax at his or her marginal income tax rate) under the new taxation arrangements |
|
*Credit Union special share account (new arrangement) |
None |
20% |
None |
A credit union member, under the new arrangements, may opt to have a special share account with 20% DIRT automatically deducted from dividend payments as final liability. |
|
*Credit Union special (3-5 year) term share accounts (new arrangement) |
Annual dividend of £375 – 480 – in the case of a 3 year and £500 – 635 – in the case of a 5 year term account |
20% on balance above threshold |
None |
An individual can only have one such account except that a married couple can hold two such accounts jointly. Lodgements cannot exceed £500 – 635 – per month except that (a) on opening the account, existing balances held with the same institution may be transferred to it, and (b) during the account's term, a once off lump sum of up to £6,000 – 7,620 – may be lodged.Except in the case of a death, each sum subscribed to the account must not be withdrawn until 3 years-5 years have elapsed. However, where the account holder attains the age of 60 during the account's term, he or she is entitled to make one withdrawal without any adverse tax consequences. |
|
**Special 3-5 year term accounts |
As above |
As above |
As above |
As above. These are the equivalent of the Credit Union special term share accounts and may be offered by all relevant deposit taking institutions. |
|
Special savings account (SSAs) |
None |
20% |
The amount on deposit cannot at any time exceed £50,000 – 63,500 |
Since the rate of DIRT which applies to these accounts is now the same as that which applies to a normal deposit account, it was provided in the Finance Act, 2001, that no new SSAs could be opened after 5 April 2001. |
|
***Deposit based special savings incentive accounts |
23% |
Maximum of £200 per month |
Under the terms of these accounts, the Exchequer contributes 25% of the amount saved each month for 60 consecutive months, starting with the month the account is commenced. Interest is allowed to accumulate tax free within the account until the account comes to an end in 5 years. At that time the accumulated interest is subject to DIRT at 23%. Withdrawals (whether of interest or capital) from the account (otherwise than on death) before the end of the 5 years suffers tax at 23% |
