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Personal injury compensation payments

  1. Overview
  2. How do you qualify for the investment exemption?
  3. What payments do not qualify for investment exemption?
  4. What does the investment exemption cover?
  5. How are social welfare payments treated for investment exemption?
  6. How can you claim the investment exemption?
  7. Other issues with investment exemption

Other issues with investment exemption

Wards of Court

Wards of Court are people who are unable to manage their affairs due to their age, intellectual disability or other reasons. They are placed under the care of a committee by the President of the High Court. The committee can consist of one or more people. They cannot spend, invest or pay out any assets of the Ward of Court without prior consent from the Office of the Wards of Court.

Wards of Court can have varying degrees of incapacity and are not automatically allowed the exemption. The committee responsible for their care must show that they qualify for the exemption.

Reinvestment in other assets

An asset that you invest in may increase in value over time. The additional income you receive from reinvesting this asset may also qualify for the exemption.

  • Example

    In 2004, Sarah used €200,000 from a qualifying compensation payment to purchase a property. She let the property and the rental income she received was exempt. Sarah's source of income comes from the investment of the compensation funds alone.

    Sarah sold the property in 2014 for €600,000. She reinvested the proceeds in another investment property. The exemption will also apply to the rental income from the new property.

    If Sarah sells her new property in the future, any gain will be exempt from Capital Gains Tax (CGT).

Assets financed partly by borrowings

You may finance the purchase of an asset partly with a qualifying compensation payment and partly with a loan. If you do, only part of the income you receive from that asset will be exempt.

The amount of income that is exempt is based on the amount of compensation used to purchase the asset. For example, if two thirds of the finance used to purchase the asset was your compensation, two thirds of the income should be exempt.

Published: 05 May 2023 Print this page

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