Special Term Accounts

"New savings options for members......"

Types of Special Term Savings Accounts

The Special Term Account offers a tax efficient savings option to Credit Union members, subject to certain terms and conditions.

There are two types of Special Term Account:

• Medium Term Account 3 Year

• Long Term Account 5 Year

Dividend earned on these accounts is tax-free up to certain limits. To qualify for the tax benefits, funds must be left in the accounts for either three years (Medium Term) or five years (Long Term).

Annual dividend earned each year may be withdrawn but there are tax penalties far early withdrawal of principle funds be fare the end of agreed term.

Account Features:

The holder of a Term Account is allowed to earn annually a tax-free dividend of €480 [Medium Term). Or €635 (Long Term). Any dividend in excess of these amounts is taxed at the DIRT rate of 20%.

Once DIRT has been deducted, the member has no further Income Tax liability on his / her dividend and does not have to declare it in his / her annual tax returns.

The credit union is not required to submit details to the Revenue Commissioners of individual members from whom it has deducted DIRT. 

The credit union is required to submit a list to the Revenue Commissioners by the 31st 0f March each year in respect of all Term Accounts opened in the preceding tax year containing only the name and address of the member, the date the account was opened and the type of account the member has opened.

To qualify for the tax benefits, funds must be left in the accounts for either three years (Medium Term) or five years (Long Term).

• Only One Medium or Long Term Account Allowed per Member.

• Please note, that not all credit unions may offer these accounts.

Some Examples:

Joe has €19,000.00 in a three year Medium Term Share Account. This year his Credit Union will pay him an annual dividend rate of 2.5%, earning him a dividend of €475.00.

The first €480.00 0f dividend is tax-free, so Joe pays no tax on his dividend.

Mary has €50,000.00 in a five year Long Term Share Account. This year her credit Union will pay her an annual dividend rate of 2.5%, earning her a dividend of €1,250.00

The first €635.00 of dividend is tax-free. The amount of dividend in excess is €615.00 This is taxed at 20%, so Mary pays €123.00 tax on her dividend of €1,250.00. This tax is deducted at source by the credit union and Mary has no further lox liability.The Dividend Rate is subject to AGM approval each year