John Deasy (Waterford, Fine Gael)
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Question 219: To ask the Minister for Finance the details with regard to the payment of tax by pensioners on their SSIA account; if he intends to exempt pensioners in a similar way to their exemption from deposit interest retention tax; the cost to the State of allowing such an exemption; and if he will make a statement on the matter. [17953/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The SSIAs were introduced in the 2001 Finance Act and give a credit to all SSIA investors of 25%. The aim of the SSIA scheme was to encourage savings. This aim has been successfully achieved with 1.1 million persons availing of the special scheme.

It is widely acknowledged that one of the reasons for the success of the SSIA scheme was its simplicity. It was clearly stated from the very outset that the SSIA investment returns would be subject to a 23% exit tax at maturity with no exemptions for anyone. I have no plans to change this.

Although all SSIA accounts are subject to an exit tax, it should be noted that the SSIA scheme represented a very good deal for all of those taking it up, whether aged 65 and over or not. For example, a person who will have saved €254 per month over 5 years, into their SSIA account, will receive a credit of €3,800 from the Exchequer even before any interest is taken into account.

It should be noted that DIRT on deposit interest was introduced in 1986 and only two reliefs apply, i.e. for those aged 65 or over and for the physically or mentally incapacitated, where the DIRT is deducted by the financial institution on the deposit interest and is refunded if the person claiming the refund is not otherwise liable to income tax on their total income. Thus, it is not a total tax exemption for all those aged 65 or over, or for the incapacitated.

It is not possible to give an accurate cost to the State of an exemption similar to that applying on DIRT as this is dependent on the investment returns on each relevant SSIA account where the account holder is not otherwise liable to income tax on their total income.

John Deasy (Waterford, Fine Gael)
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Question 220: To ask the Minister for Finance if his attention has been drawn to the distress caused to people who are widowed during the period of their SSIA account whereby the account holder passes away and the spouse is no longer allowed to continue contributing despite the fact that the payment was made from a joint account; if he will re-examine this matter; and if he will examine the case of a person (details supplied) in County Waterford. [17954/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The SSIA scheme commenced on 1 May 2001 and is administered by Qualifying Savings Managers in accordance with legislation and guidelines issued by the Revenue Commissioners. Individuals aged 18 and over who were resident in the State could open an SSIA account and in the case of a married couple, both spouses could open their own accounts.

There are specific provisions in general law in relation to the administration of an estate of a deceased person, and these must be followed before the assets of the estate can be distributed. The funds in the SSIA account constitute an asset of the estate of the deceased person. The net assets of the estate are distributed to the beneficiaries by the executors or administrators following grant of probate or of letters of administration.

On the death of an individual, his/her SSIA account is treated as maturing.

In the case of an SSIA that was a deposit account from which no withdrawals had been made up until date of death, the capital invested by the SSIA account holder, together with the Government contribution, remains the property of the deceased individual's estate and are not taxed. Tax is charged (at 23%) only on the interest portion.

The holding of an SSIA account by an individual, whose spouse has died, is not affected by the other spouse's death.