261B Taxation of specified interest

This section provides that, notwithstanding any other provision of the Income Tax Acts, “specified interest” received gross by a person entitled to exemption under subsection (1A), (1B) or (1C) will only be taxable at the rate set out in section 256.

(1) “specified interest” is defined as interest arising to a person in respect of a deposit in relation to which a declaration has been made by the person under subsection (1A), (1B) or (1C) of section 256 i.e. individuals aged 65 years or over and those who are permanently incapacitated where their income falls below certain limits.

(2)(3) This ensures that the individual, having made such a declaration, will not be charged to income tax on the gross interest at a tax rate higher than the rate set out in subsection (1)(a), (1)(b) or (1)(c) of section 256. A provision is also included so that with-holding tax on interest under section 246(2) will not apply to the interest now being paid gross of DIRT.

Relevant Date: Finance Act 2021