Revenue Note for Guidance

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Revenue Note for Guidance

205A Magdalen Laundry Payments

Summary

This section provides an exemption from tax for ex-gratia payments made to a relevant individual by or on behalf of the Minister for Justice and Equality and for certain payments made to Magdalen awardees by the Department of Employment Affairs and Social Protection pursuant to the Magdalen Restorative Justice Ex-Gratia Scheme. A capital gain accruing from the investment of such proceeds (i.e. relevant payment) is also exempt from capital gains tax.

The section applies to payments made on or after 1 August 2013.

Details

Definitions

(1) “relevant individual” means an individual who has received a payment referred from the Minister for Justice and Equality pursuant to the Magdalen Restorative Justice Ex-Gratia Scheme, referred to in paragraph (a) of the definition of “relevant payment” in this subsection.

‘relevant payment’ means:

  1. a payment or payments made, directly or indirectly, to a relevant individual by or on behalf of the Minister for Justice and Equality pursuant to the Magdalen Restorative Justice Ex-Gratia Scheme,
  2. an amount equal to the State Pension (Contributory) as set out in column 2 of Part 1 of Schedule 2 of the Social Welfare Consolidation Act 2005 to a relevant individual,
  3. an amount equal to the State Pension (Non- Contributory) as set out in Part 3 of the Social Welfare Consolidation Act 2005 to a relevant individual, and
  4. any payment, other than a payment referred to in paragraphs (a) to (c) made by or on behalf of the Minister for Employment Affairs and Social Protection to a relevant individual by virtue of them being a relevant individual

Application

Income that:

  • (2)(a) consists of a relevant payment, or
  • (2)(b) arises from the investment of such relevant payments or of income arising from such payments is also exempt from income tax to the extent that it would otherwise be chargeable to tax under —
    • Schedule C (interest paid out of public revenue),
    • Case III (certain interest paid in the State without deduction of tax) of Schedule D,
    • Case IV (by virtue of section 59 (income taxed at source), section 745 (offshore income gains) and section 747E (disposal of an interest in offshore funds)) of Schedule D,
    • Case V (rents) of Schedule D, or
    • Schedule F (distributions by Irish companies).

is exempt from income tax.

(3) Gains accruing on the disposal of assets acquired directly or indirectly with such relevant payments or with exempt income derived from such payments are exempt from capital gains tax.

(4) Where it is necessary to decide how much income is exempt income or how much gains are exempt gains, apportionment on a just and reasonable basis is to apply. This may be required where the payments or monies derived therefrom together with other funds available to the individual concerned are used to purchase an asset.

Relevant Date: Finance Act 2019