Richard Bruton (Dublin North Central, Fine Gael)
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Question 123: To ask the Minister for Finance the types of account which are subject to 20% retention tax and 23%, respectively; and the circumstances in which relief can be claimed on same. [37472/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I assume that the Deputy is referring to deposit accounts where the interest payable is subject to deposit interest retention tax, DIRT, under section 256 of the Taxes Consolidation Act 1997. DIRT is charged at the standard rate of income tax, 20%, on interest payable on the following types of deposit accounts: deposit accounts where interest is paid annually or at more frequent intervals; and long-term savings accounts where interest is payable at a determinable rate, that is, where the rate is known or can be anticipated.

The 23% rate of DIRT applies only in the case of deposit accounts where the amount of the interest cannot be determined until the date on which it is actually paid. Examples are products known as "trackers" where the rate of interest to be paid will be determined by reference to the overall change in the share index of a stock exchange or some other financial index.

DIRT is a final liability tax and no further liability arises to the individual on the interest. DIRT may be repaid only to the following categories of recipients: companies, within the charge to corporation tax in respect of the deposit interest; trustees of a trust for the benefit of a permanently incapacitated individual; a charity; or individuals where they or their spouses are 65 years or older or are permanently incapacitated — but only to the extent that such an individual, because of personal reliefs or age exemption etc., would not otherwise be liable to income tax on the deposit interest.

While not a retention tax, an "exit tax" of 23% is applied, on encashment, to the growth in the investment in the case of domestic life insurance policies or investment undertakings where the investment took place after 1 January 2001. An exit tax of 23% is also applicable on withdrawals from, cessation of or maturity of SSIA accounts. When an SSIA account matures — on death or at the end of the five year period — the exit tax is liable on only the profit earned from the investment of both the subscriptions and the Exchequer tax credits.

Richard Bruton (Dublin North Central, Fine Gael)
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Question 124: To ask the Minister for Finance if persons who are over 65 and not in a taxable position are obliged to pay retention tax on the earnings in special saving investment accounts. [37473/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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All SSIA accounts are subject to tax at 23% upon withdrawal, cessation or maturity. Where a withdrawal is made, the aggregate value of the assets withdrawn is taxable at 23%. An account that is ceased prior to maturity is liable to tax at 23% on the aggregate value of all the assets in the account at time of cessation. When an SSIA account matures — an SSIA account matures either on death or at the end of the five year period — tax at 23% is liable on only the profit earned from the investment of both the subscriptions and the Exchequer tax credits.