In a response to parliamentary questions on 4 May 2004, I explained that I had been informed by the Revenue Commissioners that Part 8 of the Taxes Consolidation Act 1997 provides for the levying of deposit interest retention tax, DIRT, on certain interest paid or credited on deposits held with banks, building societies and certain other financial institutions. Subject to certain statutory exceptions, financial institutions are required to deduct the tax from interest paid or credited in respect of the income on deposit.
In the case of individuals, entitlement to repayment of DIRT deducted is limited to situations where: (i) he or she or his or her spouse is either aged 65 years or over at any time during the tax year or permanently incapacitated by reason of mental or physical infirmity from maintaining himself or herself, or became so incapacitated, at any time during the tax year; and (ii) the income of the individuals, inclusive of the deposit interest, is below the appropriate income exemption limit for tax purposes.
Partial refund may be due to the individuals outlined in (i) above whose income, inclusive of the deposit interest, does not greatly exceed the appropriate income exemption limit. There is no automatic entitlement to minors for a refund of DIRT even where their income is under the relevant income thresholds for tax purposes.
In addition to the foregoing, as regards awards in respect of personal injuries, section 189 of the Taxes Consolidation Act 1997 provides that certain income, including deposit interest, arising to individuals, including minors, from the investment of compensation payment awarded by the courts, or under an out of court settlement, in respect of a personal injuries claim is exempt from tax. However, the following conditions apply to this exemption: as a result of personal injuries, the individual is permanently and totally incapacitated by reason of mental and physical injury from maintaining himself or herself; and the income from the investment of the compensation awarded is the sole or main income of the individual.
Accordingly, a minor who, as a result of personal injuries, is permanently and totally incapacitated by reason of mental and physical injury from maintaining himself or herself has a statutory entitlement to repayment of DIRT deducted from the investment of compensation awarded where his or her income is below the income threshold for tax purposes.
However, a minor who, as a result of personal injuries, is not permanently and totally incapacitated by reason of mental and physical injury from maintaining himself or herself does not have a statutory entitlement to repayment of deposit interest retention tax deducted from the investment of compensation awarded even where his or her income is below the income threshold for tax purposes. DIRT is applied on a very wide basis, there are very few repayment situations and I have no plans at present to extend the present DIRT repayment rules to cover the cases referred to in the by the Deputy.