Hepatitis C Compensation Payments

Introduction

Section 191 Taxes Consolidation Act 1997 exempts from income tax compensation payments made by the Hepatitis C Tribunal or similar payments awarded following the institution of civil action for damages in respect of personal injury.

Exemption

These payments are treated for income tax purposes in all respects as if they arose out of a civil action for damages for personal injury. The provisions of Section 189 Taxes Consolidation Act 1997 dealing with personal injury awards apply. Any investment income (Case 111, Case IV, Case V, Schedule C or Schedule F) arising from the compensation payment is exempt from income tax if the individual is permanently and totally incapacitated by reason of mental or physical infirmity from maintaining himself or herself. The investment income must be the sole or main income of the individual concerned.

[Individuals who have been diagnosed positive for Hepatitis C antibodies or Hepatitis C virus will only qualify for exemption in respect of any investment income arising from the compensation payment if he/she is permanently and totally incapacitated by reason of mental or physical infirmity from maintaining himself/herself, as a result of the infection.]

Sole or Main Income

Sole or main income means more than 50%. Social Welfare benefits and pensions paid in respect of the same injury or disability that gave rise to the payment of the Hepatitis C compensation will not be taken into account when calculating whether the investment income is the sole or main income of the individual. If a couple are assessed under the provisions of Section 1017 Taxes Consolidation Act 1997, (aggregation basis) the “sole or main” test is applied only to the income of the incapacitated spouse, and not to the aggregated income of both spouses in determining if the exemption is due.

Return of Income

Income exempt under the provisions of Section 189 Taxes Consolidation Act 1997 is not taken into account in computing total income for tax purposes. However, this does not relieve the individual of the obligation to include this income when making returns of total income.