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D.I.R.T., DIVIDEND AND YOU
As a member of Ballinasloe Credit Union you are required to declare your dividend to the Revenue Commissioners. However there are a number of options available to you to comply with Revenue requirements and/or discharge your liability at source i.e. at the credit union.
WHAT ARE THE OPTIONS?
REGULAR SHARE ACCOUNT
Under this option, members can have their dividend paid out without deduction of DIRT. The member is obliged by law to declare the dividend to the Revenue Commissioners. The amount of dividend must be included in the member’s annual tax return to the revenue.
SPECIAL SHARE ACCOUNT
A member can opt for a special share account where the dividend payment annually will be liable for DIRT at the prevailing rate. DIRT will be deducted by the credit union before the dividend is credited to the member’s account. This will fully satisfy all tax liabilities of the member for that dividend, and the member does not have to include that income in his/her tax return.
MEDIUM TERM SHARE ACCOUNT
Savings must be left on deposit for 3 years, earn a dividend of €480 per annum tax – free; DIRT will be applied on any dividend paid in excess of this figure
LONG TERM SHARE ACCOUNT
Savings must be left on deposit for 5 years, earn a dividend of €635 per annum tax – free; DIRT will be applied on any dividend paid in excess of this figure.
The dividend from either account can be withdrawn within one year of payment. But no other withdrawal is permitted without a payment of DIRT on the dividend(s) earned. A member who reaches age 60 during the term of the account may make a once off withdrawal (no upper limit) without penalty.
In March each year the credit union is obliged to submit, to the Revenue Commissioners, a listing of new Medium and Long Term Share Accounts opened in the previous year.
OPENING A SPECIAL SHARE ACCOUNT ?
To open a special share account, a member is required to provide identification and proof of address, (money laundering prevention).
WHAT DO I DO NOW??
It is up to each member to decide on which account best suits his or her own circumstances. Any member who has not already opted to transfer to a Special Share account now holds a regular share account.
HOW DO I TRANSFER TO A SPECIAL SHARE ACCOUNT ?
A member must inform the credit union in writing, of his/her wish to have DIRT deducted and to transfer to a SPECIAL SHARE ACCOUNT. A form for this purpose is available at the credit union office. No change of account number is required
ARE DETAILS OF MY ACCOUNT PASSED ONTO REVENUE?
In May 2008, regulations were introduced requiring banks, post offices and all other financial institution including credit union’s, to provide Revenue with details of the names and address’s of account holders who receive a dividend or (interest) payment in excess of €635 in any year, and the amount of dividend paid to their account.
This regulation will come into operation for credit unions in respect of dividends in the year ended September 30th
2009.
IS THIS REQUIRED EVEN IF I PAY DIRT ?
This information is required irrespective of whether DIRT has been deducted or not. However the revenue is advised if DIRT has been deducted.
ARE THERE ANY OTHER CHANGES IN THE REGULATIONS?
Yes. Under the new regulations, Revenue must be provided with the details of all new members who open accounts after January 1st
2009. These details will now include the member’s P.P.S (tax reference) number, which will be required to open an account with any financial institution after that.
EXEMPTIONS FROM PAYING DIRT
Since 2007 certain members may be exempt from paying DIRT tax - subject to certain conditions
Exemptions include: Members aged 65 or over, members who’s income does not exceed €20,000 (individual) €40,000 (Married Couple), Member Under 18 years of age, Member Over 18 and in full time education, Member incapacitated either physically or mentally, Member permanently Incapacitated (this exemption is available to any member who’s spouse is permanently incapacitated subject to certain criteria).
If you are unclear as to whether you qualify for the exemption, then you should seek a ruling from the tax office.
