DIRT exempt Credit Union accounts

STEINER

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Are these types of account still on offer in credit unions? Info taken from revenue.ie

Revenue Staff Instruction
8.5.1 Taxation of Credit Union Dividends and Inter.... credit union dividends, DIRT, special term accounts, long term, medium term. 8.5.1 Taxation of Credit Union Dividends and Interest As and from the 1st January 2002 Credit Unions are “relevant deposit takers” and must deduct Deposit Interest Retention Tax from deposit interest paid to account holders. The following summarises briefly the tax treatment of dividends posted to the most common Credit Union Accounts. In order to qualify as a Special Medium Term Share Account or a Special Long Term Share Account the following conditions have to be satisfied a) The account when opened must be designated as a Special Medium Term Share Account or a Special Long Term Share Account by the Credit Union. b) The account holder must be over 16 years of age.... Date:19/10/2011

Taxation of Credit Union Dividends and Interest

As and from the 1st January 2002 Credit Unions are “relevant deposit takers” and
must deduct Deposit Interest Retention Tax from deposit interest paid to account
holders.

The following summarises briefly the tax treatment of dividends posted to the most
common Credit Union Accounts.

• Share Account: The dividends in a Share Account are posted gross to a
members account every year and the responsibility lies with the account
holder to declare the dividend to Revenue. The dividend received on a Share
Account is taxable at the account holder’s marginal rate of tax.
• Special Share Account: The dividends on a Special Share Account are posted
to a members account every year after the deduction of DIRT. The DIRT
deduction is a final liability in respect of the dividend paid to the Special
Share Account.
• Special Medium Term Share Account (3 year): The 1st €480 of dividends
posted annually to a Special Medium Term Share Account are exempt from
DIRT. Any dividends in excess of €480 are liable to DIRT. The DIRT
deduction is a final liability in respect of the dividend paid to the Special
Medium Term Share Account.
• Special Long Term Share Account (5 year): The 1st €635 of dividends are
exempt from DIRT. Any dividends in excess of €635 are liable to DIRT. The
DIRT deduction is a final liability in respect of the dividend paid to the
Special Long Term Share Account.





Special Medium Term Share Account (3 year) and Special Long Term Share
Account (5 year).

In order to qualify as a Special Medium Term Share Account or a Special Long Term
Share Account the following conditions have to be satisfied

a) The account when opened must be designated as a Special Medium Term
Share Account or a Special Long Term Share Account by the Credit Union.
b) The account holder must be over 16 years of age. An account cannot be held
in the name of an individual who is under 16 years of age.
c) The Account must be in the name of the person beneficially entitled to the
interest. Nominee Accounts are not allowed.
d) An individual can only open either a Special Medium Term Share Account or
a Special Long Term Share Account. They cannot open both. However a
married couple may hold 2 joint accounts in their names.



e) An account may not be held by more than 2 individuals.
f) All shares in the account must be held on the same terms, the rate of interest
paid on the account cannot be fixed for more that 12 months and the interest
payable on the account must not be linked to any stock exchange performance.
g) At the time of opening the Special Medium Term Share Account or a Special
Long Term Share Account an individual may transfer all or part of existing
Credit Union savings to the Account.
h) The maximum that may de deposited in a Special Medium Term Share
Account in any month is €635. However an individual may make a once off
deposit of not more than €7,620 once during the lifetime of the account.
i) Funds deposited in a Special Medium Term Share Account must be left on
deposit for 3 years from the date the funds were deposited before they are
withdrawn without penalty. This provision does not apply where the account
holder, or one of the account holders in the case of a joint account, dies.
j) Funds deposited in a Special Long Share Term Account must be left on
deposit for 5 years from the date the funds were deposited before they are
withdrawn without penalty. This provision does not apply where the account
holder, or one of the account holders in the case of a joint account, dies.
k) An account holder aged over 60 years of age can only make one withdrawal
from a Special Medium Term Account or Special Long Term Account if the
account was opened when the account holder was under 60 years of age.
l) Dividends credited to a Special Medium Term Share Account or Special Long
Term Share Account may be withdrawn without penalty providing the
withdrawal is made within 12 months of being credited to the account.
m) If an individual withdraws funds from a Special Medium Term Share Account
which have not been on deposit for 3 years (5 years in the case of a Special
Long Term Share Account) the Account ceases to be a Special Medium Term
Share Account and all dividends paid since the account was opened will be
subject to DIRT.
 
Special Term Accounts are deposit accounts that have a set term and have limits to the amounts that can be deposited in them. They can be medium term or long term. DIRT is charged at 33%. However, you can hold a dividend of €480 tax-free with a medium term account or €635 tax-free with a long term account, after which you will be charged DIRT at 33%.

http://www.citizensinformation.ie/e...vestments/deposit_interest_retention_tax.html


Seem to be still available but sure arn't most unions paying little or zero interest these days.
 
From http://finance.gov.ie/viewdoc.asp?DocID=7878


" The standard rate of retention tax that applies to deposit interest is being increased by 8 percentage points and will now be 41% for payments made at least once annually. The higher rate of Deposit Interest Retention Tax (DIRT), currently 36% for interest paid less frequently than annually is to be abolished, so that all deposit interest is liable to tax at the same rate (41%). The increased rates will apply to payments, including deemed payments, made on or after 1 January 2014. In addition, the exemption for certain interest paid on “special term accounts” will be abolished for such accounts opened after Budget night and credit union “regular share accounts” will be subject to DIRT on interest/dividend payments made after 1 January 2014."
 
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