Tax and Your Savings


DIRT - Taxation of Credit Union Savings

On the 1st of January 2002, new regulations were introduced that changed the system of taxation of credit union share dividends and interest earned on deposit accounts. Note: In Tipperary Credit Union, the maximum any member may save into shares is €105,000. The next €100,000 may be saved as credit union deposits. Dirt Tax at 25% is automatically deducted from deposit interest.

Option 1: Special Share Accounts

The Dividend is posted net to the account every year after deduction of Deposit Interest Retention Tax (DIRT) from the gross dividend earned.

The Credit Union will deduct the tax and will pay it over to the Revenue Commissioners on behalf of the account holder.

The rate of DIRT will be the prevailing rate announced in the Finance Act each year. It is currently 25% (tax year 2009).

This deduction of tax will fully discharge the Income Tax liability in respect of the dividend paid to the members Special Share Account. The account holder is not required to disclose the amount of the dividend earned in their annual Income Tax Return

The member has two basic share account options, which are:

Option 2: Regular Share Account

Dividend is posted gross to the account every year.

It is the responsibility of the account holder to inform the Revenue Commissioners of any dividend posted to the account in his/her annual Income Tax Return.

In making their decision the member should note the following:

The rate of DIRT is currently 25%. If a member pays income tax at the higher rate (41%), they will pay less tax by choosing a Special Share Account. If the member is taxed at the Standard Rate (20%), the tax will be the same, however, with a Special Share Account; the member will not have to declare the amount of dividend earned on their Annual Tax Return.

Non-residents are not liable for DIRT, conditional on a declaration being made.

If the member’s income is so low that they don’t pay any income tax and they are either permanently incapacitated or 65 or over, they are entitled to claim back any DIRT that is deducted from the dividend.