Seán Ó Fearghaíl (Kildare South, Fianna Fail)
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232. To ask the Minister for Finance his views on the issues raised in correspondence (details supplied) regarding the investment of funds for Wards of Court, and taxes on such moneys; and if he will make a statement on the matter. [48365/14]

Michael Noonan (Limerick City, Fine Gael)
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I am advised that jurisdiction in Wards of Court matters is vested in the High Court. The Courts are, subject only to the Constitution and the law, independent in the exercise of their judicial functions and, therefore, it is not open to me as a Minister to comment in any way. I understand that the Assisted Decision-Making (Capacity) Bill 2013 proposes to replace the Wards of Court system with a new legal framework that gives greater autonomy to those who need assistance in making fundamental decisions concerning their lives. If the Deputy requires further details on that Bill he should approach my colleague the Minister for Justice and Equality who is sponsoring the Bill.

For the information of the Deputy, section 189 of the Taxes Consolidation Act 1997 exempts from income tax and capital gains tax, the return arising to permanently incapacitated individuals from the investment of compensation payments awarded by the Courts, or made under an out-of-court settlement, or following assessment by the Personal Injuries Assessment Board, in respect of personal injury claims. The section applies where the return on such investment (both income and gains) is greater than 50 percent of the individual's total income and gains.

In relation to Deposit Interest Retention Tax (DIRT), Finance Act 2007 introduced new arrangements that allow a person to have any interest earned on money on deposit credited to their savings account by their Financial Institution without deduction of DIRT where they satisfy certain conditions. If a person meets these conditions, they can apply to Revenue to have the interest paid without deduction of DIRT. The conditions involved are that either the person or their Spouse or Civil Partner (if appropriate) are permanently incapacitated by physical or mental infirmity from maintaining themselves, and would be entitled to a refund of the entire amount of DIRT deducted by a Financial Institution. A trustee of a Special Trust under Section 189A of the Taxes Consolidation Act 1997, can apply for exemption from DIRT, in respect of an account held by them, where the trust was set up exclusively for the benefit of one or more specified permanently incapacitated individuals and the funds of such a trust were obtained by subscriptions from the general public. The funds in the account must be beneficially owned by the specified permanently incapacitated individual(s).

As regards exit tax, where funds which are held under the control or subject to the order of any Court are used to acquire units in an investment undertaking, payments from the investment undertaking to the Courts Service in respect of these units may be made without deduction of the exit tax. In addition the Courts Service will not be subject to exit tax in respect of a transfer of units resulting solely from the changing of investment managers. However, the Courts Service will be required to operate the exit tax when they allocate those payments to the beneficial owners.

The following persons may be entitled to repayment of exit tax provided the conditions outlined in the following sections of the Taxes Consolidation Act 1997, are satisfied

- a permanently incapacitated individual who is exempt from income tax under section 189 in respect of income arising from the investment of compensation payments in respect of personal injury claims;

- the trustees of a 'qualifying trust' within section 189A where the life policy is held as part of the trust fund (funds raised for the benefit of incapacitated individual(s) through public subscriptions) of the qualifying trust, provided that income from the trust or investment returns from investment of the trust funds is the sole or main income of the incapacitated individual;

- a thalidomide victim who is exempt from income tax under section 192 in respect of income arising from the investment of compensation payments made by the Minister for Health and Children or by the foundation Hilfswerk für behinderte Kinder.

The investment undertaking or Courts Service must deduct the exit tax in the normal manner, but the individual or trust may be entitled to a repayment of the exit tax. The exit tax can be reclaimed, where appropriate, when the annual tax return is submitted to Revenue.

I assume that the stamp duty referred to in the correspondence relates to fees payable to the Courts Service and thus is outside the scope of the tax system.