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Tax Code.

Dáil Éireann Debate, Thursday - 6 May 2004

Thursday, 6 May 2004

Questions (107, 108)

Ruairí Quinn

Question:

104 Mr. Quinn asked the Minister for Finance if his attention has been drawn to the fact that injured children awarded money by the courts, on foot of a legal claim, are taxed on the interest of the capital sum of the award which is invested on their behalf by the courts until they reach the age of 18; if the Revenue Commissioners are automatically entitled to deduct DIRT from these deposits; if, in consultation with the Revenue Commissioners and the courts, he will put arrangements in place ensuring that DIRT will not be applied to awards invested by the courts on behalf of minors; and if he will make a statement on the matter. [13024/04]

View answer

Written answers

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.

Joan Burton

Question:

105 Ms Burton asked the Minister for Finance his views on the granting of VRT exemptions for vehicles for a family (details supplied) in Dublin 13 who have a blind teenage child; and if he will make a statement on the matter. [13082/04]

View answer

The disabled drivers and disabled passengers (tax concessions) scheme is open to people with disabilities that meet the specified criteria and have obtained a primary medical certificate to that effect. The senior area medical officer attached to the relevant local health board is responsible for both the medical assessment and the issue of the medical certificate.

The medical criteria for the purposes of the tax concessions under this scheme are set out in the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1991. Six different types of disablement are listed under the regulations and a qualifying person must satisfy one or more of them. The six types of disablement are as follows: persons who are wholly or almost wholly without the use of both legs; persons who are wholly without the use of one of their legs and almost wholly without the use of the other leg such that they are severely restricted as to movement of their lower limbs; persons without both hands or without both arms; persons without one or both legs; persons wholly or almost wholly without the use of both hands or arms and wholly or almost wholly without the use of one leg; persons having the medical condition of dwarfism and who have serious difficulties of movement of the lower limbs.

Only an individual who qualifies under the medical criteria as set out above may be issued with a primary medical certificate. Possession of a certificate provides for remission or repayment of vehicle registration tax, VRT, plus a repayment of VAT on the purchase of the vehicle, plus a repayment of VAT on the cost of adaptation of that vehicle. Repayment of the excise duty on fuel used in the motor vehicle, and exemption from payment of annual road tax to local authorities, are also provided for.

The Revenue Commissioners are unable to consider an application for the reliefs without the issue of a valid primary medical certificate. Application for the primary medical certificate should be made in the first instance to the appropriate health authority. In the event that a certificate is issued, application for relief should then be made to the Revenue Commissioners, Central Repayments Office, Coolshannagh, County Monaghan, contactable by telephone at 047 82800.

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