The estates of up to 50,000 people who were illegally charged for their stay in long-stay public nursing homes will have to pay inheritance tax on their repayments from the State, according to draft Department of Health proposals, writes Martin Wall
The beneficiaries of estates which receive repayments will also have the money taken into account when being assessed for current or future means-tested social welfare payments.
Draft proposals for the operation of the repayment scheme, which have been seen by The Irish Times, suggest the Government could also seek to limit access to the courts for persons who did not go through the repayments scheme, or seek to restrict the awarding of legal costs for those who initiated legal action.
The proposals state: "Rules and regulations similar to those of the Personal Injuries Assessment Board will be required. Legal proceedings would not be allowed commence until a person had applied for repayment under the scheme and rejected that payment.
"Alternatively legislation could be introduced whereby the courts could limit or refuse legal costs where repayment has been initially applied for under the scheme. The offer from the repayment scheme should have the status of a tender of lodgement in any subsequent or pending legal proceedings. This would make those who refuse to participate in the scheme potentially liable for all costs."
The Government is set to repay around €1 billion to those affected by the illegal nursing home charges controversy.
The money will go to around 20,000 people who are still alive and to a further 40,000-50,000 estates of those who have died.
However, the draft proposals indicate the Government is considering a two-tier approach to the taxation of money. Prepared early in the summer for the department's secretary general, Michael Scanlan, the proposals maintain that money repaid to people who are still alive should not be taxable.
"However, payments made to estates are effectively an inheritance and should be taxed as such," the document notes.
The department has also proposed that the repayments should not be considered assessable for social welfare purposes where the person affected and/or their spouse are still alive. The proposals reveal those eligible will be able to waive their right to a repayment and have the money assigned to fund one-off improvements in services for the elderly, mentally ill and disabled.
The proposals maintain that legislation will be needed to establish the repayment scheme on a statutory basis.