Taxation of Credit Union Savings

You may be aware that on 1st January 2002, new regulations were introduced that changed the system of taxation of credit union dividends. You now have two basic share account options. The following is a brief explanation of the two options.

Regular Share Account

Member’s may stay with the current system whereby he/she is liable to pay tax on any dividend earned, at the marginal rate of 0%, 20% or 41%. 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.

Special Share Account

Dividend is posted net to the account every year after deduction of Retention Tax from the gross dividend earned. Credit Unions are not required to submit details of individual members from whom they have deducted DIRT. 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 retention tax will be the prevailing rate announced in the Finance Act each year. It is currently 35% and will reduce to 33% in 2020 . This deduction of tax will fully discharge the Income Tax liability of the account holder in respect of the dividend paid to his/her Special Share Account. The account holder is not required to disclose the amount of dividend earned in his/her annual Income Tax return. Members must request in writing that his/her account be changed to a Special Share Account.

MEMBERS WHO ARE NOT LIABLE FOR TAX SHOULD STAY WITH A REGULAR SHARE ACCOUNT.