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Permanently and totally incapacitated

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  • 18-03-2013 9:00am
    #1
    BizAngel
    Registered Users Posts: 48 ✭


    I can't find any guidance on the definition of "permanently and totally incapacitated" for the purpose of claiming exemption from DIRT on Compensation payments received for Personal Injury. A friend of mine received compensation for a personal injury 10 years ago (back injury). He is in receipt of a disbility payment and has been assessed at 30% disabled by the department of social protection. He continues to work but in a restricted capacity. I'm trying to determine whether he would quality for exemption from DIRT on the interest he is receiving on the compensation investments. Ant advice would be appreciated....
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    #2
    Peregrinus
    Registered Users Posts: 26,511 ✭✭✭✭Peregrinus


    BizAngel wrote: »
    I can't find any guidance on the definition of "permanently and totally incapacitated" for the purpose of claiming exemption from DIRT on Compensation payments received for Personal Injury. A friend of mine received compensation for a personal injury 10 years ago (back injury). He is in receipt of a disbility payment and has been assessed at 30% disabled by the department of social protection. He continues to work but in a restricted capacity. I'm trying to determine whether he would quality for exemption from DIRT on the interest he is receiving on the compensation investments. Ant advice would be appreciated....
    You may be confusing two issues here.

    First, a compensation payment received: This doesn't require a DIRT exemption because, not being deposit interest, it doesn't attract deposit interest retention tax in the first place. It does enjoy an exemption from income tax, but this applies to all personal injury compensation payments, not just those to permanently and totally incapacitated people.

    Secondly, if you receive a compensation payment and invest it, the income arising from the investment is exempt from income tax, provided certain conditions are satisfied. The main conditions are:

    - the income from the investment must be the taxpayers only or main source of income; and

    - the injury for which compensation was received must have given rise to permanent physical or mental infirmity which prevents the taxpayer from maintaining himself or herself.

    This is a relief from income tax, but if you are entitled to this relief you can also claim exemption from DIRT. You have to apply for this, attaching medical information.

    I doubt that your friend will qualify for this, if he has been assessed as only 30% incapacitated by DSP. However the Revenue do make their own assessments, so your friend has nothing to lose by applying.


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