Ivor Callely (Dublin North Central, Fianna Fail)

I thank Senator Bannon for raising this important and interesting question. I apologise on behalf of my colleague, the Minister of State at the Department of Finance, Deputy Parlon, who attempted to come to the House but was called to the Lower House for a division.

The Minister for Finance has been informed by the Revenue Commissioners that Part 8 chapter 4 of the Taxes Consolidation Act 1997 provides for the levying of deposit interest retention tax 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 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 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 such individuals 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. The Senator raised this issue in a compassionate manner. DIRT does not apply to people who are incapacitated or people over 65 years of age.

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 arising to individuals including minors, including deposit interest, 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 must be permanently and totally incapacitated by reason of mental or physical injury from maintaining himself or herself and the income from the investment of the compensation award must be 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 deposit interest retention tax 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 DIRT from the investment of compensation awarded, even where his or her income is below the income threshold for tax purposes. My understanding is that DIRT is applied on a wide basis and there are very few repayments. I understand the Minister for Finance has no plans at present to extend the present DIRT repayment rules to cover the cases referred to by the Senator. I am sorry the news is not more favourable. Perhaps Senator Bannon would look at the qualifying criteria and if somebody has received a compensation award due to personal injury and is permanently and totally incapacitated he or she should qualify. I hope this is helpful.