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The SSIA Scheme Matures

 (written March 2006)

Within the next year, the Special Savings Incentive Accounts (SSIA) held by over 1.1 million Irish people will mature. Over the 5 years of the scheme, individuals have subscribed, and can continue to subscribe, amounts of up to €254 per month in these accounts. Each subscription attracts a 25% top-up from the Government, subject to a number of terms and conditions. Any account holder who subscribed the maximum monthly amount in their SSIA throughout its 5-year timespan can expect to receive a total payback on maturity of up to €19,050 plus an element of accumulated interest or investment growth.

The SSIA maturity process is administered by the Revenue Commissioners on behalf of the government. In this issue we look closely at the terms and conditions applying to the maturity process.

What Tax is Due?

When an SSIA matures, tax of 23% is calculated on the accumulated interest or investment growth over the 5-year period.

If the SSIA account does not comply with the scheme’s terms and conditions, the 23% tax is levied on the entire value of the SSIA including the original savings and the 25% top up.

The SSIA4 Declaration

As part of the maturity process, every SSIA account holder is required to completed a declaration form, known as an SSIA4 form, and return this to the financial institution with whom the SSIA is held. This declaration must be made within three months of the account maturing, and in making the declaration, the account holder declares the following, to demonstrate that they have complied with the conditions of the scheme:

•           That they have only one SSIA account.

•           That they are the beneficial owner of the SSIA funds.

•           That they were resident or ordinarily resident in the State for the duration of the SSIA.

•           That they did not finance their SSIA subscriptions through borrowings or by deferring repayment of existing borrowings.

•           That they did not assign or otherwise commit SSIA funds as security for a loan.

The Residence condition

Most of the conditions attaching to SSIAs are relatively straightforward. One possible exception is the condition which states that the account holder must have been resident or ordinarily resident in the State for the duration of the SSIA.

Any individual who lived in the State since the commencement of their SSIA will automatically meet this requirement. Anyone who has lived abroad in the meantime can also remain eligible, on condition that they have remained “ordinarily resident” during the 5-year SSIA period

An individual who leaves Ireland , to live abroad, continues to be "ordinarily resident" until they have spent 3 consecutive tax years abroad. Therefore, anyone who lived abroad during the period of their SSIA will remain eligible once they have not been away for a period of more than three years.

Breaches of the Scheme

If the SSIA scheme conditions have been breached, or if the account holder cannot make the declaration for any other reason, they are obliged to notify the financial institution in writing. The financial institution must then close the account and apply tax of 23% to the full proceeds of the SSIA, including the original savings and the 25% top up

The SSIA4 Timetable

Each account holder should expect to receive their SSIA4 declaration form from their financial institution about three months before their SSIA maturity date. They must then return their signed declaration directly to the financial institution by the maturity date, otherwise the financial institution cannot complete the maturity process. Once the declaration is made, the SSIA will mature on the due date, the financial institution will deduct the appropriate tax and the only difficulty at that stage for the account holder is how to spend their money!

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