Willie Penrose (Longford-Westmeath, Labour)
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Question 195: To ask the Minister for Finance the impact of the recent announcement by the Revenue Commissioners in relation to credit union accounts; the criteria involved; the position in relation to accounts which have been accumulated by way of a consistent pattern of savings from after tax income or by way of a legitimate gift or inheritance; and if he will make a statement on the matter. [27561/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Section 125 of the Finance Act 2006 (now Section 891B of the Taxes Consolidation Act 1997) empowered the Revenue Commissioners, with the consent of the Minister of Finance, to make regulations requiring certain financial institutions, such as banks, credit unions, investment funds and assurance companies, to make automatic annual reports to the Revenue Commissioners in relation to certain payments (including interest) that they make to their customers. Regulations to this effect were made on 6 May 2008 in S.I No. 136 of 2008 entitled Return of Payments (Banks, Building Societies, Credit Unions and Savings Banks) Regulations 2008. This legislation was broadly in line with a recommendation from the Revenue Powers Group, established by the then Minister for Finance in 2003, which found reporting arrangements of this kind to be a common feature in other jurisdictions.

In the case of Irish banks and building societies, the regulations require reports of certain deposit interest to be made to Revenue for the years 2005 et seq. The first such reports are due on 15 September 2008. In tandem with this reporting date, Revenue has announced a voluntary disclosure scheme focused on large (i.e. greater than €100,000) bank and building society deposits where the funds relate to taxable sources not declared for tax purposes.

Unlike in the case of banks and building societies, the first reports from credit unions will be for interest paid to certain deposit account holders in the year 2008 and the first such reports are not due until 31 March 2009. Furthermore, dividends that relate to share accounts for periods prior to the end of 2008 are not reportable. In general it is only accounts and investments that pay interest or dividends of €635 or more in aggregate in a year that are to be reported on. This threshold is however subject to an anti-account splitting provision which requires that interest or dividends that are paid for all new accounts opened on or after 1 January 2008 to be reported in the first year that any such interest or dividends payments are made.

The primary purpose behind the new regulations is to encourage taxpayers to be generally more compliant and to limit the scope for using domestic financial institutions as a "safe haven" for depositing significant taxable funds that have not been disclosed for tax purposes. I am informed by the Revenue Commissioners that they have emphasised that the information that they receive on foot of these new reporting requirements will be used only for the identification of significant risk. Revenue has given public assurances that anyone who has placed funds with a domestic financial institution (including a credit union) by way of savings from after tax income or by way of a legitimate gift or inheritance has nothing to fear from these new reporting requirements and there is no need for them to contact Revenue.