Written Answers. - Special Savings Incentive Scheme.
Noel Ahern
Ceist:
86
Mr. N. Ahern
asked the
Minister for Finance
the regulations in relation to eligibility to join the national savings scheme; when entry to the scheme ends; if an Irish citizen working abroad can join; if an Irish citizen working for an Irish company or State body located abroad can join; if an Irish citizen, for example a civil servant on secondment to the EU Commission or other such body can join; and if he will make a statement on the matter.
[32147/01]
I assume the Deputy is referring in the question to the special savings incentive account scheme, SSIA. This new scheme commenced on the 1 May 2001 and every eligible person has the opportunity to start a SSIA account during the following 12 months, that is, an SSIA can be opened at any time up until the closing date for the scheme, 30 April 2002. In order to open a SSIA, an individual must be aged 18 or over and be resident for tax purposes in this State on the date the account is opened. During the period that the SSIA continues, the individual must be either resident or ordinarily resident here.
Ireland, like most other states, imposes income tax on people resident in the State in respect of all their income no matter from where it is sourced, that is, including world-wide income; and, in the case of all other persons, in respect of income which is sourced in the State. An individual's residence status for Irish tax purposes is determined by the number of days he or she is present in Ireland during a given tax year. An individual is considered to be resident in Ireland for a particular tax year in either of the following circumstances: If he or she spends 183 days – 135 days in the short tax year of assessment 2001, – or more in Ireland for any purpose in that tax year; or if he or she spends 280 days – 244 days in the short tax year of assessment, 2001 – or more in Ireland for any purpose over a period of two consecutive tax years he or she will be regarded as resident of Ireland for the second tax year. A day for residence purposes is one on which an individual is present in Ireland at midnight.
The concept of resident for tax purposes is a very useful one which allows the legislation to focus on a particular class of individuals, that is, those who are liable to tax in the State on their world-wide income – both income sourced in the State and anywhere else.
The term "ordinary residence" as distinct from "residence" refers to an individual's pattern of residence over a number of tax years. If one has been deemed resident in Ireland for three consecutive tax years, one is regarded as ordinarily resident from the beginning of the fourth tax year. This tax status may be retained for up to three years even if an individual is abroad during this time. In the context of the SSIA scheme this means that an individual resident here on commencement of an SSIA and who subscribes to an SSIA may then be able to work abroad for three consecutive tax years without losing his or her rights to continue to subscribe to the scheme. However, such a person must return to Ireland in the year following the three year period and be deemed resident in order to continue to be eligible for the scheme.
Unless one is either resident or ordinarily resident as described above, one cannot subscribe to an SSIA, irrespective of one's work status abroad. That is, it does not matter if one is working for the Government, a State body or a private company abroad – one is only eligible to participate in the SSIA scheme if one fulfils the tax residence requirements already mentioned. It should be noted, however, that an individual who is resident in the State for tax purposes and working outside the jurisdiction, say in Northern Ireland, would be eligible to participate in the scheme. I have no plans to make any changes to the legislation in this regard.
