Ó Síocháin (Inspector of Taxes), Appellant v Bridget Neenan
| Jurisdiction | Ireland |
| Judgment Date | 01 January 1999 |
| Date | 01 January 1999 |
| Docket Number | [1996 No. 28R; S.C. No. 151 of 1997] |
| Court | Supreme Court |
High Court
Supreme Court
Revenue - Income tax - Social welfare benefits paid in respect of dependent children - Tax paid under statute - Whether statute misconstrued - Whether increase in widow's social welfare (contributory) pension for dependent children was income of widow for income tax purposes - Social Welfare (Consolidation) Act, 1981 (No. 1).
In the year ended the 5th April, 1990, the respondent received a widow's (contributory) social welfare pension totalling £6,482.10 from the Department of Social Welfare. The pension of £6,482.10 consisted of an amount of £2,704.50 in respect of the respondent and £3,777.60 by way of increase to the pension for her five dependent children. The appellant assessed the respondent to income tax on the full amount of the pension, namely, £6,482.10.
The respondent appealed the assessment on the ground that the widow's (contributory) social welfare pension was overstated by £3,777.60 in the assessment.
The appellant submitted that the correct construction of the relevant social welfare provisions was that the widow and not the qualified child was to be considered properly as the person to benefit from the pension.
The Appeal Commissioners stated a case to the High Court at the request of the appellant and asked whether it was correct to hold that the respondent was not liable to income tax in respect of the increases in the weekly rates of widow's (contributory) pension paid to the respondent in respect of each qualified child who resided with her.
Held by the High Court (Smyth J.), in answering the question in the case stated in the affirmative, that the widow to whom monies are paid in respect of a qualified child received them not for her own benefit but on the basis that such monies would be paid out for the benefit of the qualified child.
Yates (Inspector of Taxes) v. Starkey [1951] Ch. 465approved.
The appellant appealed to the Supreme Court.
Held by the Supreme Court (Denham, Keane and Murphy JJ.), in allowing the appeal, 1, that the express provisions in the Social Welfare (Consolidation) Act, 1981, entitling the widow to the pension and the failure to draw any distinction between the entitlement to the pension and the increases thereon were coercive evidence of an intention that the beneficial entitlement to the entire of the social welfare payment should vest in the widow.
Ó Coindealbháin ó coindealbháin (Insp. of Taxes) v. O'Carroll [1989] I.R. 229distinguished.
2. That the Act of 1981 contained no words of trust in favour of all or any of the children nor was there any specific indication that any part of the increase to the basic pension should be applied for their benefit.
Obiter dictum: That, in enacting the Social Welfare (Consolidation) Act, 1981, the Oireachtas was satisfied to rely on the moral obligation of a widow to make provision for her children.
Cases mentioned in this report:-
Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64.
Chambers v. Fahy [1931] I.R. 17.
Inspector of Taxes v. Kiernan [1981] I.R. 117; [1982] I.L.R.M. 13.
McGrath v. McDermott [1988] I.R. 258; [1988] I.L.R.M. 181, 647.
Óó Coindealbháin (Insp. of Taxes) v. O'Carroll [1989] I.R. 229.
Yates (Inspector of Taxes) v. Starkey [1951] Ch. 465; [1951] 1 All E.R. 732.
Case stated.
The facts have been summarised in the headnote and are set out more fully in the judgment of Smyth J., infra.
The respondent appealed to the Appeal Commissioners pursuant to s. 416 of the Income Tax Act, 1967, against an assessment to income tax of £6,482.10 for the year of assessment 1989/90. The case was heard by an Appeal Commissioner who determined that the additional child's quantum of the widow's (contributory) pension was the property of the child but given in trust to the mother and was not subject to tax.
The appellant requested the Appeal Commissioners to state a case to the High Court pursuant to s. 428 of the Income Tax Act, 1967. The case stated was dated the 22nd January, 1996.
The case stated was heard by the High Court (Smyth J.) on the 31st July, 1996.
Notice of appeal was filed on the 1st May, 1997. The appeal was heard by the Supreme Court (Denham, Keane and Murphy JJ.) on the 28th April, 1998.
Cur. adv. vult.
| Smyth J. | 4th April, 1997 |
The matter comes before the court by way of case stated dated the 22nd January, 1996, from Appeal Commissioner C.V.B. Diggin. The point at issue is whether the increase in the widow's social welfare (contributory) pension granted in respect of qualified children was, for income tax purposes, the income of the widow.
The respondent has been a widow since 1989 and has five qualified children who reside with her whose births range over the years 1976 to 1987. The respondent is a secondary school teacher employed by the Department of Education and is paid a salary from which income tax is deducted under P.A.Y.E. In the year ended the 5th April, 1990, the respondent received a widow's (contributory) social welfare pension totalling £6,482.10 from the Department of Social Welfare. The pension of £6,482.10 consisted of an amount of £2,704.50 in respect of the respondent and £3,777.60 by way of increase thereto, in respect of the respondent's five dependant children. The inspector of taxes by notice of assessment dated the 26th February, 1991, assessed the respondent on the full amount of the pension, viz. £6,482.10.
The assessment was appealed on the 27th February, 1991, the ground of the appeal being that the widow's (contributory) social welfare pension was overstated by £3,778.00.
Legislative background
Section 27(2) of the Social Welfare Act, 1952, provides as follows:-
"(2) The weekly rate of a widow's (contributory) pension shall be increased by the amount set out in column (4) of Part I of the Third Schedule to this Act in respect of a qualified child or each of two qualified children who normally resides or reside with the beneficiary and who -
(a) normally resided with her or the husband immediately before the death of the husband, or
(b) being a child or step-child, or children or step-children, of the husband, became normally resident with her subsequent to the death of the husband."
The provisions aforesaid were amended by s. 18(1) of the Social Welfare Act, 1976, which increased the weekly rate of a widow's (contributory) pension and extended the rate of benefit where there were more than two qualified children.
Matters were put on a more broad based footing by the provisions of s. 95 of the Social Welfare (Consolidation) Act, 1981, which reads:-
"(1) The weekly rate of widow's (contributory) pension shall be increased by the amount set out in column (4) or (5) of Part I of the Second Schedule in respect of each qualified child who normally resides with the beneficiary.
(2) The weekly rate of widow's (contributory) pension, in the case of a person who has attained pensionable age, shall be increased by the amount set out in column (6) of Part I of the Second Schedule for any period during which-
(i) the beneficiary is so incapacitated as to require full-time care and attention,
(ii) there is residing with the...
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