Revenue Note for Guidance

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Revenue Note for Guidance

Termination of special savings incentive account

Summary

This section sets out when an account is treated as maturing or ceasing and how the assets in the account are to be subsequently treated for tax purposes. It also provides for charging to tax, income received in respect of assets in an SSIA, but after the account has matured/ceased.

Details

Maturation/Cessation of an SSIA

(1) An SSIA matures on the fifth anniversary of the end of the month in which a subscription was first made if the appropriate declaration has been made by the individual concerned. Thus if an SSIA is commenced on 15 May 2001, it will mature on 31 May 2006, subject to the declaration being completed. However, if before that time the individual dies, the SSIA will then be treated as maturing on the day of his/her death.

(2) However, if before the SSIA is to be treated as maturing, any of the conditions attaching to SSIAs are breached, or the individual concerned becomes neither resident nor ordinarily resident in the State, the SSIA will be treated as ceasing.

Consequence of Maturity or Cessation

(3) When an SSIA is treated as maturing or ceasing there is no entitlement to tax credits in respect of subsequent subscriptions to the SSIA. The assets remaining in the SSIA after all tax liabilities have been discharged are treated as being acquired by the individual at their then market value.

Income received for qualifying assets after SSIA has Matured/Ceased

(4) If income is received in respect of qualifying assets in an SSIA after it has matured/ceased, that income, when received, will be treated as a cash withdrawal made before the account has matured/ceased and will be taxed at the 23 per cent tax rate. Such a situation could arise in respect of an SSIA offered by a credit union which declares dividends annually. If the dividend is not declared when the SSIA closes then the tax could not be deducted at that time, hence the need for the treatment specified above.

(5) Qualifying savings managers are required to issue a “maturity statement” to a qualifying individual, on request, when the SSIA matures. The maturity statement contains certain information regarding the individual’s SSIA and is to assist the individual in availing of the incentive to invest some or all of the SSIA funds in a pension product – see Part 36B.

The information which must be specified in the maturity statement is

  • the name and address of the qualifying individual,
  • the Personal Public Service (PPS) Number of the qualifying individual,
  • the maturity date of the SSIA (i.e. the date on which the account was treated as maturing),
  • the gross funds in relation to the SSIA (i.e. the value of the assets in the account immediately before the maturity date),
  • the maturity tax in relation to the SSIA (i.e. the liability to tax on gains treated as accruing to the account on the maturity date,
  • the net funds in relation to the SSIA (i.e. the value of the assets remaining in the account immediately after the maturity date and immediately after the maturity tax has been discharged), and
  • the name and address of the qualifying savings manager.

Relevant Date: Finance Act 2021