James Bannon (Fine Gael)

I thank the Minster of State for coming before the House to take this important Adjournment matter regarding DIRT on court invested awards for injured minors. I am sure the Minister of State will agree that taking money from young children under any guise is reprehensible and doubly so when they are injured, vulnerable and in need of care and long-term medical treatment. The situation that has lead to the imposition of DIRT on the interest of moneys invested by the courts on behalf of minors who have been awarded compensation for injury is, I am sure, an oversight and not the deliberate action of anyone in the Department of Finance. However, as stealth taxes go this has to be one of the most shameful.

The days of cruelly pushing children up chimneys and down mines to make a few pence are long gone but this oversight is leading to a situation in which money is still being made from the suffering of young children. Actions for compensation of minors are taken on their behalf by parents or guardians but those parents have no control over any ensuing compensatory award. These moneys are invested on the child's behalf under the Trustee (Authorised Investments) Act 1958 and the Trustee (Authorised Investments) Order 1958. Part 4 chapter 4 of the Consolidation Act 1997 provides for the levying of deposit interest retention tax on certain interest paid or credited on deposits held with all financial institutions. The situation vis-À-vis injured minors does not appear to have been considered under exemptions except in cases of total incapacity and it is such an exemption I urge the Minister for Finance to consider.

Parents have no rights as to where or on what terms their child's money is invested and I am sure that almost 100% of them are unaware that the interest gained is subject to DIRT. It would appear the State, acting on behalf of these children, does not have their best interests at heart. Rather than investing this money where it is liable to DIRT, it could avoid any tax by investing the money entrusted to its care in alternative areas such as An Post savings certificates which are tax-free. However, of course there is no benefit to the Exchequer in this case.

DIRT tax was introduced to close a loophole whereby people failed to disclose interest on deposit accounts where that interest was under £50, spreading their money over several accounts to evade liability. DIRT is now deducted from everyone with a deposit account, including children. At concept stage, I am sure this tax was never intended to cover interest accruing to injured minors but, more importantly, neither was an exemption considered in the case of children relying on court awards and interest gained, to access necessary treatment. These compensatory awards are hard fought for and ensue as a direct consequence of the injury suffered by the child. In the majority of the cases, care is ongoing, sometimes over a lifetime.

Despite the common awareness that interest is currently extremely low, can the Minister of State imagine the shock when families discover that most of this meagre interest gain has been considerably eroded by tax? We do not countenance child labour of any nature, but surely making money on the backs of interest awarded to a young child is open to question. Normally, children would not have a significant deposit interest income and therefore DIRT would not be applied. However, the possibility that injured children could have such income has been overlooked.

It is interesting to note that while in replies to parliamentary questions the Minister for Finance has stated there is no automatic entitlement to minors or a refund of DIRT, even where their income is under the relevant thresholds for income tax purposes, I have a letter from the accounts section of Dublin District Court which states that "if a minor or guardian wishes to reclaim DIRT, they are directed to the Revenue Commissioners." The letter also states the court, "will provide certificates of interest on request." It is extraordinary that a court accounts section should be unaware of the requirements, but they too would not believe a Government could inflict such hardship on children. Nonetheless, a reply from the Revenue Commissioners to a request for a refund on a form 54D sets the record straight, saying that to be exempt from tax one must be more than 65 years old. Given that it would be difficult to find a child fitting into this category, it is imperative that this oversight in the existing regulations be amended as a matter of urgency.

Injury to children knows no boundaries. It is spread across a broad social and income spectrum. Whether parents can afford it, they are forced to make up any shortfall to meet the cost of necessary treatment. It is up to the Government to take this opportunity to lessen that burden and, in the interest of fairness and compassion, extend the boundaries of exemption in relation to DIRT to all injured children. I would appreciate a favourable response.