Paschal Donohoe (Dublin Central, Fine Gael)
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Tax relief can be claimed in respect of payments made by a parent under a deed of covenant in favour of their permanently incapacitated child where that child is 18 years of age or more.  However in the case of any child of less than 18 years of age, any payment by a parent under a deed of covenant is deemed under the Tax Acts to be the income of the parent and not income of the child.  This is derived from a long-established principle in the income tax code. 

Relief from income tax is available under Part 31 of the Taxes Consolidation Act 1997 in respect of certain covenants to:

- one or more adults aged 65 or over (the relief available is restricted to 5% of the total income of the person making the covenant),

- permanently incapacitated minors (i.e. under 18 years of age) where the person receiving the covenant is not a child of the person making the covenant, and

- permanently incapacitated adults, including covenants made by a parent for the benefit of their adult child who is permanently incapacitated.

I do not currently have plans to amend this provision, however all tax measures are kept under review by my Department as a matter of course.

It should be noted that an Incapacitated Child Tax Credit of €3,300 per annum is also available to an individual who has custody of, and maintains at his/her own expense, a child who:

- is under 18 years of age and permanently incapacitated physically or mentally,

- is over 18 years of age and unable to support themselves and who became permanently incapacitated before turning 21 years of age,

- became permanently incapacitated aged 21 years or over, but while in full-time education, or

- became permanently incapacitated aged 21 years or over, but while undergoing full-time training for a trade or profession (and the training was expected to last for at least two years).

Further information on this credit can be found on the Revenue website at:-