Dáil Éireann Debate, Thursday - 1 July 2004
51 Mr. J. Higgins asked the Minister for Finance the revenue which was generated by DIRT on court awards to injured children for the most recent year for which figures are available; and if he will make a statement on the matter. [19866/04]
View answer52 Mr. J. Higgins asked the Minister for Finance the reason there are no plans to remedy the anomaly whereby injured minors cannot reclaim the DIRT paid on interest on their court awards. [19867/04]
View answerI propose to take Questions Nos. 51 and 52 together.
I am informed by the Revenue Commissioners that the information furnished on DIRT returns made by financial institutions does not require the yield from deposit interest retention tax on interest income arising from court awards to injured children to be identified. Accordingly, the specific information requested by the Deputy is not available.
As indicated in my reply to Parliamentary Question No. 104 on 6 May 2004, the entitlement of individuals 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, including minors, outlined in (i) whose income — inclusive of the deposit interest — does not greatly exceed the appropriate income exemption limit.
In addition, 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 or physical injury from maintaining himself or herself has a statutory entitlement to repayment of DIRT deducted from the investment of compensation awarded. This is without reference to whether his/her income is below the income threshold for tax purposes.
While court awards for injuries are generally not subject to taxation, special income tax treatment of the income from such awards by way of exemption or repayment of DIRT is confined by and large to those individuals, whether adults or children, who as a result of these injuries are permanently and totally incapacitated and where the income from the award is the sole or main income of the individual. DIRT is applied on a very wide basis and there are very few repayment situations. To widen the DIRT repayment to the income from all court awards irrespective of the personal circumstances of the individual would narrow the DIRT tax base and undoubtedly lead to requests for similar repayments for other categories of individuals. Accordingly, I have no plans at present to extend the DIRT repayment rules to cover all injured minors.
53 Mr. Hogan asked the Minister for Finance if value club cards or similar concessions to employees of major supermarkets are included for calculation purposes under the benefit in kind changes made in the Finance Act 2004; and if he will make a statement on the matter. [19934/04]
View answerThe position is that, except where otherwise provided, benefits in kind have been subject to taxation. However, provision was made in the Finance Act 2003 and the Social Welfare Act 2003 to bring taxable benefits in kind within the PAYE system from 1 January 2004. I am informed by the Revenue Commissioners that a concession of the type mentioned by the Deputy given by an employer to an employee may, depending on the circumstances of the case, be subject to tax and PRSI as a benefit in kind.
Where a discount is given by an employer on the purchase of goods by one of his or her employees, it is not regarded as a taxable benefit if the sum paid by the employee is equal to or greater than the cost to the employer of acquiring or manufacturing the goods. Many employers, including many supermarkets, operate staff discount schemes and I understand that Revenue have no difficulty in approving exemption for such schemes where the discount is given in a transparent way at the time of purchase and the goods are not sold to employees at below cost.
However, where an employee can accumulate value over a period — based on purchases from the employer — and that value is subsequently given by the employer either in the form of vouchers or through a value club card scheme, then a tax liability will most likely arise as the value in such circumstances is capable of being converted into money or money's worth. Each case will depend on its own facts but, in general, staff value accumulation schemes are, because of the convertibility factor, considered to go beyond the scope of the tax treatment of staff discount schemes.
54 Mr. Penrose asked the Minister for Finance the income limits available to a married couple aged 65 and 62; the amount of income they can earn, prior to their entering the tax net at 20%; and if he will make a statement on the matter. [19943/04]
View answerUnder the current age exemption limits, a married couple, where one is or both are aged 65 or over, may earn up to €31,000 per annum without any liability for income tax arising. If the married couple have a dependent child or children, the age exemption limit of €31,000 is increased by €575 for each of the first two children and by €830 for each subsequent child. A dependent child is a child of the claimant who is: under 18 years of age; over 18 years of age and in full-time education or training full-time as an apprentice where the training is for at least two years; or incapacitated, either physically or mentally, having become so before reaching 21 years of age or after reaching the age of 21 while still in full-time education or while training full-time for a trade or profession for a minimum of two years.
Where one or both spouses are aged 65 or over and their income rises above the exemption limit applying in their case, they will pay tax under the system of marginal relief taxation at a rate of 40%. They will do so, however, only on the amount of income in excess of the exemption limit and until such time as their income level reaches a point — sometimes referred to as the marginal relief cut off point — where the tax payable under the system of marginal relief is the same as would be payable under the normal system of credits and bands or until their income reaches a statutory maximum as set out in legislation, namely, twice the exemption limit of €62,000. For a married two-earner couple, the cut-off point will usually be significantly below €62,000 and will vary depending on whether one or both spouses are in the PAYE sector or self-employed, on the number of dependent children, if any, and on the income split between the spouses.
Where the income of a married couple with at least one spouse aged 65 or over exceeds the marginal relief cut-off point appropriate to them, the couple will pay tax on all their income in accordance with the normal system of rate bands and tax credits. Depending on their level of income and their income split, the couple may be liable for tax at a rate of 20% or 42% or a combination of both under the normal system. I am informed by the Revenue Commissioners that if the Deputy has in mind a specific case, they will be happy to examine the details and furnish a report to the Deputy in due course.
