Michael Creed (Cork North West, Fine Gael)
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To ask the Minister for Finance if persons in receipt of invalidity pension are exempt from DIRT tax; and if he will make a statement on the matter. [4210/13]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that there is no specific exemption from DIRT for a person in receipt of invalidity pension. However, an exemption does apply to a person who is permanently incapacitated by reason of physical or mental infirmity from maintaining himself or herself and who would be entitled to a refund of the entire amount of DIRT deducted by a Financial Institution. The Finance Act 2007 introduced arrangements that allow a person to have any interest earned on money on deposit automatically credited to their savings account by their Financial Institution without deduction of DIRT where they satisfy certain conditions.

The conditions are:

A Where the individual (or their spouse or civil partner) is aged 65 or over

The individual must submit a declaration on form DE 1 to the financial institution where the account is held to the effect that they or their spouse or civil partner are aged 65 years or over during the year and—

1. in the case of an individual who is single, his or her total annual income does not exceed the current exemption limit of €18,000, or

2. in the case of an individual who is married or in a civil partnership, the joint total annual income of the individual and his or her spouse or civil partner does not exceed €36,000.

B All other cases

The individual must apply to their local Revenue tax office requesting the exemption and stating that he or she is permanently incapacitated from maintaining him or herself and that his or her (or spouse or civil partner’s) tax credits for the year will exceed the tax that would be chargeable on his or her (or spouse's or civil partner’s) total income (this is essentially gross income from all sources, including invalidity pension, deposit interest etc). The tax office will then notify the financial institution where the account is held that the individual qualifies for the automatic exemption. Where a person’s income exceeds the relevant exemption limit by a small amount, he or she will not be entitled to the exemption but may be entitled to a partial refund of the tax deducted.