Widow with five children wins action on pension

A WIDOW is not liable to pay income tax in respect of the child dependant portion of her Department of Social Welfare pension…

A WIDOW is not liable to pay income tax in respect of the child dependant portion of her Department of Social Welfare pension, the High Court has decided.

Mr Justice Smyth found an appeal commissioner was correct in believing that Ms Bridget Neenan was not liable to income tax on the weekly rates of widows (contributory) pension paid to her for the children who lived with her.

The case had been referred to the High Court by way of a case stated by the appeal commissioner, who had heard it in July 1991.

Her husband died in April 1989 and she was later awarded a widow's contributory pension by the Department of Social Welfare.

READ MORE

The pension included a child dependant allowance for each of her five children.

The Inspector of Taxes, in assessing Ms Neenan's income, included the CDA but this assessment was appealed on her behalf.

The commissioner's decision was that the "additional child quantum" should not be subject to tax as income in the hands of Ms Neenan.

The High Court, in giving its decision, has held that Ms Neenan received the CDA not for her own benefit but for the benefit of the qualifying children. A stay has been granted in the event of an appeal.

In the case statement to the High Court, the appeal commissioner submitted that the point at issue was whether the increase in the widow's social welfare contributory pension granted in respect of the children was, for income tax purposes, the income of the widow.

Ms Neenan has five children, born between 1976 and 1987. She is a secondary school teacher.

During the year ended April 5th, 1990, her salary from the Department of Education amounted to £17,460, from which income tax totalling £5,237 was deducted under PAYE. In the same year, she received a widow's contributory social welfare pension totalling £6,482 from the Department of Social Welfare.

The pension of £6,482 consisted of £2,705 in respect of Ms Neenan and £3,777 by way of increase in respect of her five dependent children. In February 1991, the Inspector of Taxes assessed Mrs Neenan on the full amount of the pension, £6,482.

The inspector had submitted that there was no allowance styled child dependant allowance provided for in the Social Welfare Acts, even though the term may, be in common usage.

It was also claimed that the increase in respect of child dependants was chargeable on the widow, being an addition to her pension in recognition of having dependants to support.