Revenue Note for Guidance
264 Conditions and declarations relating to special savings accounts
This section deals with the Special Savings Accounts for individuals. It sets out the various conditions which had to be satisfied before an account could be regarded as a Special Savings Account.
It also describes the contents of the declaration which individuals had to make if a deposit was to be treated as a Special Savings Account.
Finally, it ensures that DIRT is the only liability to tax which arises in respect of interest on such accounts
No new Special Savings Accounts can be opened after 6 April 2001 (see definition of “special savings account” in section 256(1)).
(1) The conditions which had to be satisfied before an account would have been regarded as a Special Savings Account were as follows —
- the account had to be designated a Special Savings Account by the financial institution,
- the account could not be denominated in a foreign currency,
- the account could not be connected with any other account held by either the account holder or any other person,
- no withdrawals could be made from the account within the first 3 months of it being opened,
- withdrawals must be at 30 days notice,
- all deposits held in the account must be subject to the same terms and conditions,
- fixed interest arrangements on the account must not exceed 24 months,
- the rate of interest payable must not, directly or indirectly, be linked to or determined by a change in the price or value of any shares, stock, debentures or securities listed on a stock exchange or dealt in on an unlisted securities market,
- the balance on the account must not at any time exceed €63,500,
- the account had to be opened and held in the name of a person of full age (that is, someone aged 18 or over or who is married),
- the account had to be opened and held in the name of the person beneficially entitled to the interest on the account,
- except in the case of an account opened and held by a married couple, the account must not be a joint account,
- except in the case of a married couple, an individual can only have one special savings account at any one time,
- in the case of a joint account opened by a married couple, they can have one other joint account at the same time.
An account is connected with another account if —
- one account was opened with reference to the other or if one was opened with a view to the opening of another on particular terms, and
- the terms on which either of the accounts were opened are more favourable than would have been available had the other account not been opened.
(2) On opening a Special Savings Account —
- the individual to whom any interest on the account is payable had to make and sign the appropriate declaration and give it to the financial institution,
- the declaration had to be in a form prescribed or authorised by the Revenue Commissioners,
- the declarer had to declare that the conditions that relate to the individual opening the account are satisfied (see subsection (1)),
- the full name and address of the individual beneficially entitled to the interest on the account had to stated in the declaration,
- the declaration had to contain an undertaking by the declarer that he/she will notify the financial institution if any of the conditions relating to the individual opening the account cease to be satisfied (for example, he/ she opened a prohibited further Special Savings Account), and
- the declaration had to contain such other information as the Revenue Commissioners reasonably require.
Retention of, and examination of, declarations
(3) A financial institution must —
- retain the declarations for a period of 6 years or for 3 years after the account is closed or becomes a normal DIRT account, and
- allow access to the declarations to an inspector on being given notice in writing.
The inspector is empowered to examine all declarations made available to him/her and to take such extracts or copies as he/she thinks fit.
Final liability on payment of DIRT
(4) Section 261 is amended on an “as if” basis so as to provide that the amount of DIRT deducted in respect of interest on Special Savings Accounts is to be regarded as being in full settlement of all tax liability in respect of that interest. This is achieved by substituting, in that section, a new paragraph (c) which provides that, except for the purposes of a claim to repayment under section 267(3), the interest on a Special Savings Account is not to be regarded as part of total income for tax purposes – the exclusion in respect of section 267(3) is because to make a claim for repayment under that section the interest must be part of total income.
Ceasing of status as Special Savings Account
(5) A Special Savings Account is to cease to be such an account if any of the conditions in subsection (1) cease to be satisfied, and subsection (4) is not to apply to any interest payable in respect of the account on or after the date of such cessation. Where this occurs, the account becomes a normal deposit the interest on which is subject to deduction of DIRT in accordance with section 256(1)(b).
Relevant Date: Finance Act 2020