S.I. No. 596/2001 - Finance Act, 2001 (Section 57) (Commencement) Order, 2001

1. This Order may be cited as the Finance Act, 2001 (Section 57) (Commencement) Order, 2001.

2. The 1st day of January 2002, is appointed as the day on which

section 57

of the

Finance Act, 2001

(No. 7 of 2001), comes into operation.

S.I. No. 596 of 2001

GIVEN under my Official Seal,

This 19th day of December 2001

Charlie McCreevy TD

Minister for Finance

Explanatory note for S.I.

(This note is not part of the Instrument and does not purport to be a legal interpretation)

This order appoints the 1st day of January 2002 as the date for the coming into operation of

section 57

of the

Finance Act, 2001

. Section 57 amends the

Taxes Consolidation Act, 1997

in order to provide for the measures announced in the Budget 2001 in relation to the tax treatment of credit union dividends and interest and in relation to tax exemptions for certain medium and long-term accounts held in credit unions and other financial institutions.

Under existing arrangements, there are two types of account in credit unions - regular share accounts and deposit accounts.

Section 57

of the

Finance Act, 2001

allows for the creation of two additional types of account - a special share account and a special term share account. The present tax treatment of regular share accounts - liability of credit union members to declare dividends to the Revenue Commissioners and pay tax thereon at one's marginal rate of tax - will remain the same under the new measures; the existing similar liability for deposit account interest will be replaced however by the automatic deduction of Retention tax.

As regards the new special share and special term share accounts these are being created solely for the purposes of giving effect to the taxation provisions and do not create any new rights for the purposes of the

Credit Union Act, 1997

. While one of the conditions attaching to the special term share account is that no more than £500 (€635) per month can be deposited in such an account, there will be no restriction on a credit union member depositing any amount in excess of this sum in any of the other accounts i.e. a deposit account, regular share account or special share account.

I, Charlie McCreevy T.D., Minister for Finance, in exercise of the powers conferred on me by

section 57

of the

Finance Act, 2001

(No. 7 of 2001), hereby order as follows