Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.
SSIAs
I realise that the Government opened the scheme in April and it is available for take-up for 12 months. If the scheme is taken up in month one or month 12, is there a difference on the contributions or will both receive five years' Government contributions from the date the savings started (i.e. if you start it later, does your SSIA still run for five years and receive five years' Government contributions and just mature whatever number of months later).
Mr S.O'N, e-mail
The Government will contribute to your account for five years from the time the account is opened regardless of what time during the year to the end of next April it is opened. You have only this one year in which to open such an account.
I am currently a US resident and have been for the past nine years. I am wondering if I am eligible to invest in the new Government savings plan? I do have a PPS number after working three years in Ireland. Also, is the 25 per cent, plus 4 per cent return on the fixed savings plan, guaranteed? Or is it like investing in the stock market where low risk will most likely be the most secure?
Ms. M.H., e-mail
If you are a US resident, you are not eligible for the scheme. One of the prerequisites is that you should be tax-resident or ordinarily resident in Ireland and you would not fill that condition.
On the second point, the Government contribution of 25 per cent is guaranteed to be paid and, if you opt for a deposit account, it is guaranteed that it will be received at the end of the savings period. Similarly, if you opt for a fixed rate - 4 per cent or whatever - it too is guaranteed. On a variable rate deposit account you will receive whatever interest accrues as a result of the rate pertaining to the account at different stages during its term.
Tax at the base rate plus three per cent - currently 23 per cent - will be levied on the interest accrued on the account but not on the capital, including the Government contribution.
I have taken some time out to try to gain some "unambiguous" information on the above and appreciate what's available from both yourself and Ireland.com. I'd like to go ahead with making a decision to start a SSIA but wonder if the financial institutions are likely to offer terms that are more attractive to investors. Is it likely they haven't got the "windfall" they were expecting and there may be more on offer from them?
Mr D.F., e-mail
It's possible but it's a very difficult call. In the run-up to the opening of the scheme companies were constantly altering the terms of their products as they sought a competitive advantage over rivals. This has not happened so much since, but then it is early days. The take-up of the scheme in May was relatively low, although recent figures show greater consumer interest in June. Still, I think the institutions are happy to wait for the punters - as long as they are not losing out to competitors.
I would expect a pivotal time for the institutions would be after the summer holidays and before Christmas, when people have paid off one set of bills and have yet to incur the other. If one finds it is performing poorly vis-a-vis another, it is quite likely they will adjust their product(s) slightly. Of course, they can do this up to the end of next April, and there will no doubt be a flood of business in those last months.
For deposit-based products - recommended by most advisers for those looking to invest purely for the five-year term - any such decision depends on the direction of rates.
As I said at the outset, there is no clear view one way or the other. You will just have to make a judgment call like the rest of us.
I have opened a special savings account with a bank and they have made a large mix-up in the commencement date. This leaves me out of pocket earlier than I had anticipated.
Basically I was wondering if it is possible to close the account and reopen one with another financial institution, thus ensuring that I only have one account. Can you shed some light on this for me?
Mr M.S., e-mail
Yes you can, as long as the new account is opened this year and you still meet all the criteria for opening such an account. However, accounts closed early are subject to a 23 per cent tax charge on all the money in them, including any Government top-up paid to date.
I have been a resident of and taxpayer in Ireland for over 30 years, but will shortly be going to reside in Northern Ireland for a temporary period of between six and 12 months and thereafter will be returning to live in Ireland again on a permanent basis. Will this period of non-residency prevent me from participating in the SSIA.
Mr B.K., e-mail
When you say you will reside in Northern Ireland, you need to be aware that there is a difference between residence in the colloquial sense of the word and residence in tax terms. If you continue to pay your income tax in the Republic, you will be resident here. Even if not, you will be ordinarily resident here for up to three tax years as long as you continue to pay income tax on money earned other than that earned from business carried out wholly abroad and about £3,000 of other income. So, in short, there seems to be no reason why you will not continue to be eligible to open and operate a special savings incentive account.
