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DIRT swept up at your credit union

This week saw the quiet implementation of new tax rules applying to some credit union accounts.

Deposit Interest Retention Tax (DIRT) is now charged on a number of accounts where it wasn't previously and members might get a shock when they realise this.

The rules actually came into play last year, but as many Credit Unions only apply dividends annually, their customers may only now see the effect.

DIRT tax is one of the most punitive there is, at 41pc. Some savers may also have to pay additional PRSI of 4pc on top, meaning a total tax swipe of 45pc, almost half any interest made on savings. And we know interest rates are paltry enough.

Up to last year, many credit union accounts were largely exempt from this, but now have had to impose the tax. Both Special Term accounts opened after October 15, 2013 and Regular Share Accounts are now obliged to be taxed.

The former are high yielding accounts over a specific time, e.g. 3 or 5 years, and the tax may not be noticed until this term is up, so it's worth checking with your credit union to see if you are affected. However, there is good news for pensioners on low incomes. They remain DIRT exempt on all savings accounts if they are over 65 and their income doesn't exceed €18,000 pa (€36,000 for couples).

They may need to alert Revenue though, as DIRT is automatically deducted by financial institutions.