Taxes Consolidation Act 1997 section 189A

Special trusts for permanently incapacitated individuals

Section 189A provides tax exemptions on income and gains arising to trustees and beneficiaries of special qualifying trusts established by public subscription for the benefit of permanently and totally incapacitated individuals.

• A qualifying trust must be established by deed exclusively for named incapacitated individuals, funded by public subscriptions of up to €381,000 (or unlimited where no single donor contributes more than 30% of the total), with trustees who are not connected to the beneficiaries.
• Income arising to the trustees from investing the trust funds is exempt from income tax, PRSI and USC, and any capital gains accruing to the trustees in respect of trust funds are exempt from CGT.
• Payments from the trust to the incapacitated individual, and income and gains generated by the individual from investing those payments, are exempt from income tax, PRSI, USC and CGT provided that such income and gains exceed 50% of the individual's total income and gains for the year (the "50% test").
• Invalidity pensions from the Department of Social Protection are excluded when applying the 50% test, and all exempt income and gains must still be included in tax returns despite the exemption.