Dáil Éireann Debate, Tuesday - 8 April 2014
82. Deputy Eric Byrne asked the Minister for Finance the reason the 2014 rate of 41% DIRT is not just applicable from January 2014 but rather can be applied to savings schemes set up in 2013 or earlier years and which become payable in 2014 thereby penalising persons who may have signed up for savings schemes when the DIRT was at a lower rate; and if he will make a statement on the matter. [15990/14]
View answerThe increase in the rate of Deposit Interest Retention Tax (DIRT) arising from the Budget changes announced in October 2013 took effect in respect of interest paid or credited on or after 1 January 2014.
I am informed by the Revenue Commissioners that the legislation governing the operation of Deposit Interest Retention Tax (DIRT) is set out in Chapters 4 and 5 of Part 8 of the Taxes Consolidation Act 1997. Under the provisions of Section 256(2)(a) and Section 257(1)(a) of the Taxes Consolidation Act 1997 the rate of DIRT that is applicable to a payment or crediting of deposit interest is the rate in operation on the date the relevant deposit interest is paid or credited to the account. This means that when a change of rate occurs there is no apportionment of the interest chargeable to tax between the amounts accrued before and after the date of the rate change. The new rate is applied to all of the interest paid or credited on or after the date of the rate change.
In many instances the depositor may not become entitled to the interest concerned until the date of payment or crediting. Applying different rates of DIRT to interest paid or credited, based on an apportionment of the interest to different periods, would add significant complexity to the operation of DIRT, being a retention tax deducted at source. It would also be contrary to the general principle whereby a taxpayer only becomes liable to tax on interest when he or she receives that interest by payment of crediting.
