Richard Bruton (Dublin North Central, Fine Gael)
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Question 278: To ask the Minister for Finance if he will extend the tax exemption that applies to pensioners on low income who earn deposit interest in order that an exemption will also apply to exit taxes which are levied on the maturity of certain savings bonds and other savings products; and if he will make a statement on the matter. [29929/08]

Michael Ring (Mayo, Fine Gael)
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Question 308: To ask the Minister for Finance the plans he has to address the anomaly that exists between the way savings and saving bonds are dealt with in respect of State pension holders; and if he will make a statement on the matter. [30445/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 278 and 308 together.

I assume that the questions refer to the exemption from Deposit Interest Retention Tax (DIRT) in certain circumstances and the application of exit taxes under the "gross roll up" regime.

Since the enactment of the Finance Act 2007, individuals are exempt from Deposit Interest Retention Tax (DIRT) on their savings income provided they or their spouse are aged 65 or over, or permanently incapacitated, and their total income in a year (including the savings income) is below the annual exemption limit — currently €20,000 in the case of a single person and €40,000 in the case of a married couple. In any case where DIRT was deducted and the individual would otherwise qualify for the exemption, he or she is entitled to claim a refund of that tax directly from the Revenue Commissioners after the end of the tax year.

In the case of investment products which are linked to life assurance policies or to collective investment funds in which an individual has invested, the "gross roll up" regime applies under which the investor's funds may accumulate tax free while invested in the policy or fund. However, an exit tax at 23 per cent applies on the sale or redemption, or at the end of the 8 year period following the acquisition of the investment. This 23 per cent tax is the only tax paid on the income and gains accumulated in the policy or the fund over this period. There is no provision for exemption or refund of this tax other than to non-resident investors or to permanently incapacitated persons.

The Deputies will be aware that it is customary for a Minister for Finance not to comment on possible tax changes in advance of the Budget which is due to be delivered on 14 October 2008.