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 €205,000. The next €100,000 may be saved as credit union deposits. Dirt Tax is automatically deducted from deposit interest.

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

Option 1: Special Share Accounts

The Dividend is posted to the account every year and then Deposit Interest Retention Tax (DIRT) is deducted automatically from the dividend. The Credit Union pay the tax 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.

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

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.

Existing members may change their regular share account to a special share account. Tipperary Credit Union recommends that members open a Special Share account.

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.

You can pick up a taxation options form at our head office and at any branch office.

For any queries you may have on the taxation of credit union savings please contact your tax advisor or the Revenue.