Joe is employed as a plumber. He lets two houses for a number of years. He receives a net rental income of €28,800 per year.
He was involved in an accident on a building site which resulted in him becoming permanently and totally incapacitated from maintaining himself.
He began proceedings against his employer and accepted €400,000 in an out of court settlement. He invested the €400,000, receiving €36,000 from the investment every year. He also receives an invalidity pension of €10,347 per year.
In 2013, Joe claimed an exemption on his investment income.
His total income for 2013 is:
| Income | Amount |
|---|
| Investment income |
€36,000 |
| Rental income |
€28,800 |
| Invalidity Pension |
€10,347 |
| Total income |
€75,147 |
The Invalidity Pension is ignored when deciding if he is entitled to the exemption claimed. The total income used for his exemption claim is €64,800.
The €36,000 investment money is now more than 50% of his total income. So he is entitled to the exemption as claimed.
His income for tax purposes is calculated as follows:
| Income | Amount |
|---|
| Rental income |
€28,800 |
| Invalidity Pension |
€10,347 |
| Total income for tax purposes |
€39,147 |
The investment income of €36,000 is exempt. As Joe was earning rental income from his houses prior to his injury, his rental income is not exempt.