Finance Act, 1993

Chapter IV

Taxation of Savings and Investment

Amendment of Part III (special classes of companies) of Corporation Tax Act, 1976.

11.Part III of the Corporation Tax Act, 1976 , is hereby amended as follows, as respects accounting periods ending on or after the 1st day of February, 1993, for the purposes of paragraph (f), and as respects accounting periods ending on or after the 1st day of January, 1993, for the purposes of the other paragraphs of this section:

(a) in subsection (1A) (inserted by the Finance Act, 1986 ) of section 33—

(i) by the substitution for paragraphs (b) and (c) of the following paragraphs:

“(b) general annuity business,

(c) special investment business, and

(d) life assurance business (excluding such pension business, general annuity business and special investment business),”,

and

(ii) by the insertion after “class of business” of “as if it were the only business of the company”,

(b) in subsection (2) of section 33—

(i) by the insertion after “charged to tax” of “at the rate specified in section 1 (1) (b) (as amended by the Finance Act, 1990 )”,

(ii) in paragraph (b), by the insertion after “concerns)” of “or 33B (2) (inserted by the Finance Act, 1993) or 88 (3)”, and

(iii) by the substitution for paragraph (c) of the following paragraphs—

“(c) relief for the management expenses, if any, attributable to the life business, other than special investment business, of a company shall be withheld before any relief for management expenses attributable to the special investment business of the company is withheld; and

(d) (i) sections 34 (2), 35 and 38 shall, and

(ii) the proviso (inserted by the Finance Act, 1993) to subsection (5) of section 16 shall not,

apply for the purposes of computing the profits of the life assurance business or the industrial assurance business, as the case may be, which would have been charged to tax under Case I of Schedule D.”,

(c) by the insertion after section 33A (inserted by the Finance Act, 1992 ) of the following section:

“Distributions received from Irish resident companies.

33B.—(1) Sections 2 and 83 (4) (as amended by section 38 of the Finance Act, 1992 ) shall not have effect as respects a distribution received by an assurance company, in connection with that part of its life business the profits of which are charged to corporation tax otherwise than under Case I or Case IV of Schedule D; and the income represented by the distribution shall be equal to the aggregate of the amount of the distribution and the amount of the tax credit in respect of the distribution.

(2) Where an assurance company is entitled to a tax credit in respect of a distribution which is chargeable, by virtue of subsection (1), to corporation tax—

(a) it may, subject to the provisions of section 45 (5), set the credit against the corporation tax, as reduced by virtue of sections 36 (2) and 36A (6) or by either of those sections, chargeable on its profits for the accounting period in which the distribution is made and, where the credit exceeds that corporation tax, the excess shall be paid to it, and

(b) notwithstanding the provisions of sections 24 and 155, the income represented by the distribution shall not be franked investment income for the purposes of sections 15 and 25.”,

(d) by the insertion after section 35 of the following section:

“Chargeable gains of life business.

35A.—(1) For the purpose of computing corporation tax on chargeable gains accruing to a fund or funds maintained by an assurance company in respect of its life business—

(a) (i) section 3 of the Capital Gains Tax (Amendment) Act, 1978 , and

(ii) section 19 of the Capital Gains Tax Act, 1975 , as it applies to assets specified in that section or in any other provision of the Capital Gains Tax Acts,

shall not have effect, and

(b) paragraph 14 of Schedule 1 to the Capital Gains Tax Act, 1975 , shall, as respects—

(i) subparagraphs (1) and (2), and

(ii) subparagraph (3), in so far as a chargeable gain is not thereby disregarded for the purposes of that subparagraph,

apply as if section 12 of the Finance Act, 1993, subsection (8) (a) of section 36A (inserted by that Act), section 46A (as amended by that Act) and paragraph (a) (ii) had not been enacted.

(2) Subject to section 46B, where an assurance company, in the course of carrying on a class of life assurance business mentioned in paragraph (c) or (d) of section 33 (1A) (inserted by the Finance Act, 1986 , and as amended by the Finance Act, 1993) disposes of, or is deemed to dispose of, assets in an accounting period, the amount, if any, for each such class of business by which the aggregate of allowable losses exceeds the aggregate of chargeable gains on the disposals or deemed disposals in the course of that class of business in the accounting period shall be—

(a) disregarded for the purposes of section 5 (1) of the Capital Gains Tax Act, 1975 , and

(b) treated, for the purposes of this Act, as a sum disbursed by the company in the accounting period as an expense of management, other than an acquisition expense (within the meaning of section 33A (inserted by the Finance Act, 1992 )), incurred in the course of carrying on that class of business.

(3) For the purposes of subsection (2), any amount which, apart from section 12 of the Finance Act, 1993, would be treated as a chargeable gain or an allowable loss of an accounting period of a company by virtue of section 46B shall also be treated as arising on a disposal of assets by the company in the accounting period so that each such amount shall be taken into account in determining the amount, if any, by which the aggregate of allowable losses exceeds the aggregate of chargeable gains on disposals of assets by the company in the course of carrying on life assurance business (excluding pension business, general annuity business and special investment business) in the said period.”,

(e) in section 36—

(i) by the substitution for subsections (1) to (3) of the following subsections:

“(1) A claim may be made under this section by an assurance company in respect of unrelieved profits from investments referable to life business, other than special investment business, carried on by the company.

(2) For any financial year for which the rate of corporation tax exceeds the standard rate of income tax for the year of assessment in which that year ends, the corporation tax in respect of any of the said unrelieved profits of the company for that year shall be reduced, on a claim in that regard being made by the company, by so much of that tax as is equal to the amount by which—

(a) the corporation tax chargeable on the company for that year in respect of the part specified in subsection (5) of the said unrelieved profits,

exceeds—

(b) the corporation tax which would be so chargeable in respect of that part of those profits if the rate of corporation tax for that year were equal to the standard rate of income tax for the said year of assessment.

(3) For the purposes of this section—

(a) ‘unrelieved profits’ means the amount of profits on which corporation tax falls finally to be borne;

(b) the amount of tax which is or would be chargeable on a company shall be taken to be the amount of tax which is or would be so chargeable after allowance of any relief to which the company is or would be entitled otherwise than under the provisions of this section or section 33B (2) (inserted by the Finance Act, 1993), 46 or 88.”,

and

(ii) in subsection (5), by the substitution for “unrelieved income” in each place where it occurs in paragraph (a) of “unrelieved profits”,

(f) by the insertion after section 36 of the following sections—

“Special investment policies.

36A.—(1) In this section—

‘excluded shares’ means—

(a) shares in an investment company within the meaning of Part XIII of the Companies Act, 1990 ,

(b) shares in an undertaking for collective investment in transferable securities within the meaning of the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 1989 ( S.I. No. 78 of 1989 ), or

(c) shares in a company being shares the market value of which may be expected to approximate at all times to the market value of the proportion of the assets of the company which they represent;

‘inspector’, in relation to any matter, means an inspector of taxes appointed under section 161 of the Income Tax Act, 1967 , and includes such other officers as the Revenue Commissioners shall appoint in that behalf;

‘mortality cover’ means any amount payable under a policy of life assurance in the event of the death of a person specified in the terms of that policy;

‘ordinary shares’ means shares forming part of a company's ordinary share capital;

‘qualifying shares’ means ordinary shares—

(a) in a company which is resident in the State, or

(b) (i) which are listed in the official list of the Irish Stock Exchange, or

(ii) dealt in on the smaller companies market, or the unlisted securities market, of the Irish Stock Exchange,

other than excluded shares;

‘special investment business’ means so much of the life business of an assurance company as is connected with special investment policies;

‘special investment fund’ means a fund in respect of which the conditions specified in subsection (2) are satisfied;

‘special investment policy’ means a policy of life assurance, issued by an assurance company to an individual on or after the 1st day of February, 1993, in respect of which—

(a) the conditions specified in subsection (3) are satisfied, and

(b) a declaration of the kind specified in subsection (4) has been made to the assurance company;

‘specified qualifying shares’, in relation to a special investment fund, means qualifying shares in a company the issued share capital of which has a market value of less than £100,000,000 when the shares are acquired for the fund.

(2) The conditions referred to in the definition of ‘special investment fund’ in subsection (1) are as follows:

(a) the fund shall be owned by an assurance company;

(b) the fund shall be kept separately from its other funds, if any, by the assurance company;

(c) the fund shall represent, and represent only, the liabilities of the assurance company in respect of its special investment business, and, accordingly, there shall not be any arrangements whereby any asset of the fund is connected, directly or indirectly, with any business of the company other than its special investment business;

(d) the aggregate of the consideration given for shares which are, at any time before the 1st day of February, 1994, assets of the fund shall not be less than—

(i) as respects qualifying shares, 40 per cent., and

(ii) as respects specified qualifying shares, 6 per cent., of the aggregate of the consideration given for the assets which are assets of the fund at that time;

(e) the aggregate of the consideration given for shares which are, at any time within the year ending on the 31st day of January, 1995, assets of the fund shall not be less than—

(i) as respects qualifying shares, 45 per cent., and

(ii) as respects specified qualifying shares, 9 per cent.,

of the aggregate of the consideration given for the assets which are assets of the fund at that time;

(f) the aggregate of the consideration given for shares which are, at any time within the year ending on the 31st day of January, 1996, assets of the fund shall not be less than—

(i) as respects qualifying shares, 50 per cent., and

(ii) as respects specified qualifying shares, 12 per cent.,

of the aggregate of the consideration given for the assets which are assets of the fund at that time;

(g) the aggregate of the consideration given for shares which are, at any time on or after the 1st day of February, 1996, assets of the fund shall not be less than—

(i) as respects qualifying shares, 55 per cent., and

(ii) as respects specified qualifying shares, 15 per cent.,

of the aggregate of the consideration given for the assets which are assets of the fund at that time,

and, for the purposes of paragraphs (d) to (g), the amount of the consideration given for assets of the fund shall be determined in accordance with section 36B (inserted by the Finance Act, 1993), section 9 of the Capital Gains Tax Act, 1975 , and paragraph 4 of Schedule 1 to the Capital Gains Tax (Amendment) Act, 1978 .

(3) The conditions referred to in the definition of a ‘special investment policy’ are as follows:

(a) the policy of life assurance concerned shall be designated by the assurance company concerned as a special investment policy;

(b) any payments received by the company in respect of the policy shall not, or shall not in aggregate if there is more than one such payment, exceed £50,000;

(c) the company shall ensure that its liability in respect of the policy does not exceed £50,000 at any time on or after the fifth anniversary of the date on which the first payment was received by it in respect of the policy;

(d) the policy shall not be issued to or owned by an individual who is not of full age;

(e) the policy shall be issued to an individual—

(i) who is beneficially entitled to, and

(ii) to whom there shall be paid,

all amounts, other than mortality cover, payable under the policy by the company;

(f) except in the case of a policy issued to and owned jointly by, and only by, a couple married to each other, the policy shall not be a joint policy;

(g) unless the policy is issued to and owned jointly by, and only by, a couple married to each other, the policy shall be the only such policy owned by the individual;

(h) if the policy is to be issued to and owned jointly by, and only by, a couple married to each other, it shall be the only such policy, or one of two only such policies owned by them and only by them,

and, for the purposes of paragraphs (d) to (h), references to ownership of a policy shall be construed as references to beneficial ownership of the policy.

(4) The declaration referred to in paragraph (b) of the definition of ‘special investment policy’ in subsection (1) is a declaration in writing to an assurance company which—

(a) (i) is made by the individual (hereafter in this section referred to as ‘the declarer’) to whom any amounts, other than mortality cover, are payable by the assurance company in respect of the policy in respect of which the declaration is made, and

(ii) is signed by the declarer,

(b) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(c) declares that at the time when the declaration is made the conditions referred to in paragraphs (d) to (h) of subsection (3) are satisfied in relation to the policy in respect of which the declaration is made,

(d) contains the full name and address of the individual beneficially entitled to any amounts, other than mortality cover, payable in respect of the policy in respect of which the declaration is made,

(e) contains an undertaking by the declarer that if any of the conditions specified in paragraphs (d) to (h) of subsection (3) cease to be satisfied in respect of the policy in respect of which the declaration is made, the declarer will notify the assurance company accordingly, and

(f) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this section.

(5) (a) An assurance company shall—

(i) keep and retain for not less than the longer of the following periods, that is to say:

(I) a period of 6 years, and

(II) a period which, in relation to the policy in respect of which the declaration is made, ends not earlier than 3 years after the date on which the company ceases to have any liability in respect of the policy, and

(ii) on being so required by notice given to it in writing by an inspector, make available to the inspector, within the time specified in the notice,

all declarations of the kind specified in subsection (4) which have been made to it.

(b) The inspector may examine and take copies of, or of extracts from, a declaration made available to him under paragraph (a).

(6) The corporation tax which is chargeable on any profits on which corporation tax falls finally to be borne which are attributable to the special investment fund of an assurance company shall be reduced, for all the purposes of the Tax Acts other than subsection (2) (as amended by the Finance Act, 1993) of section 33, so that, before it is reduced by any credit, relief or other deduction under the Tax Acts apart from this section, it is 10 per cent. of those profits.

(7) (a) For the purposes of this Act, any deduction from the profits of an assurance company, being profits of more than one class of life assurance business referred to in section 33 (1A) (as amended by the Finance Act, 1993), shall be treated as reducing the amount of the profits of each such class of business by an amount which bears the same proportion to the amount of the deduction as the amount of the profits of that class of business, before any deduction, bears to the amount of the profits of the company brought into charge to corporation tax.

(b) In paragraph (a) ‘deduction’ means any deduction, relief or set-off which may be treated for the purposes of corporation tax as reducing profits of more than one description.

(8) For the purposes of computing income arising from, or chargeable gains accruing from the disposal of, assets of the special investment fund of an assurance company—

(a) each asset of the fund on the day on which an accounting period of the company ends shall be deemed to have been disposed of and immediately reacquired at the asset's market value on the said day;

(b) without prejudice to the treatment of losses on such shares as allowable losses, gains accruing on the disposal or deemed disposal of eligible shares, within the meaning of Chapter III of Part I of the Finance Act, 1984 , in qualifying companies, within the meaning aforesaid, shall not be chargeable gains;

(c) section 33B (inserted by the Finance Act, 1993) shall not apply to distributions in respect of the shares mentioned in paragraph (b); and

(d) section 43 shall not have effect.

Transfer of assets.

36B.—Where an assurance company transfers the whole or part of an asset (any interest in or rights over an asset being regarded for the purposes of this section as part of the asset)—

(a) which it owned prior to the transfer or which was created by the transfer, into, or

(b) which it owns after the transfer, out of, its special investment fund, the company shall be deemed to have disposed of and immediately reacquired the asset or part, as the case may be, at the market value of the asset or part, as the case may be, at the time of the transfer.

Special investment policies: breach of conditions.

36C.—(1) For the purposes of this section, a policy of life assurance held by an individual, whether married or not, shall not be a special investment policy at any particular time if—

(a) as respects the policy—

(i) a declaration of the kind specified in subsection (4) of section 36A has not been made, or

(ii) any of the conditions referred to in subsection (3) of section 36A is not satisfied,

at that time, or

(b) as respects the individual, he has at that time a beneficial interest prohibited by section 16 of the Finance Act, 1993, in classes of investment mentioned in paragraphs (a), (b), (c) and (d) of subsection (1) of that section.

(2) Where an assurance company becomes aware at any time that a policy of life assurance which it has treated as a special investment policy is not such a policy—

(a) it shall ensure that, in accordance with section 36A (2) (c), its special investment fund does not, after that time, represent its liability in respect of the policy, and

(b) for all the purposes of the Tax Acts, other than section 18 (3) of the Finance Act, 1988 , the liability to corporation tax of the company for the accounting period, in which it became aware that the policy was not a special investment policy, shall be increased by an amount determined by the formula—

A − B

×

10

___

9

×

S − 10

_____

100

where—

A is the amount which was the assumed liability, other than the liability, if any, in respect of mortality cover, of the company in respect of the policy immediately before it became aware that the policy was not a special investment policy,

B is—

(i) the amount which was the liability other than the liability, if any, in respect of mortality cover, of the company in respect of the policy when the policy ceased to be a special investment policy,

or

(ii) if the policy was never a special investment policy, the amount of the aggregate of the payments received, and not repaid, by the company in respect of the policy,

and

S is the standard rate per cent. for the year of assessment in which the said accounting period ends.”,

(g) in section 38—

(i) by the substitution for “33,36 and 37” of “33 and 36”, and

(ii) by the insertion of the following proviso to the section—

“Provided that the corporation tax which would have been paid by the company if it had been charged to tax in respect of its life business under Case I of Schedule D shall be computed, for the purposes of section 33, as if so much of the trading income of the company in respect of its life business as does not exceed the franked investment income attributable, by reference to section 36 (4), to the shareholders of the company were charged to corporation tax, notwithstanding section 1, at a rate per cent. determined by the formula—

A

__

B

× 100

where—

A is the aggregate amount of the tax credits comprised in the franked investment income received in the accounting period concerned by the company in connection with its life business, and

B is the aggregate amount of that franked investment income.”,

(h) in section 43—

(i) in subsections (1) and (3), by the substitution for “and general annuity fund” of “, general annuity fund and special investment fund”, and

(ii) in subsection (3), by the substitution for “liabilities in respect of general annuity and” of “liabilities in respect of special investment, general annuity or”,

(i) by the substitution for section 46 of the following section—

“Overseas life assurance companies: tax credit in respect of distributions.

46.—Where an overseas life assurance company—

(a) receives a distribution from a company resident in the State, and

(b) is not entitled to, or disclaims, by notice in writing to the appropriate inspector, within the meaning of section 9 (1) of the Finance Act, 1988 , relief in respect of the distribution under—

(i) the Convention set out in Schedule 8 to the Income Tax Act, 1967 , or

(ii) arrangements made under section 361 (agreements for relief from double taxation of income) of the Income Tax Act, 1967 ,

as applied for corporation tax,

then, it shall be deemed to be entitled to such a tax credit in respect of the distribution as it would be entitled to if it were a company resident in the State; and, accordingly the income represented by the distribution shall be the aggregate of the distribution and the tax credit.”,

(j) in section 46A (inserted by the Finance Act, 1992 )—

(i) in subsection (1), by the deletion of the definitions of “collective investment undertaking”, “life business fund”, “market value”, “trading company” and “units” and the insertion of the following definitions:

“‘life business fund’ means the fund or funds maintained by an assurance company in respect of its life business other than its special investment business;”,

“‘linked liabilities’ means liabilities in respect of benefits to be determined by reference to the value of linked assets;”,

(ii) by the substitution for subsections (2) and (3) of the following subsections:

“(2) Each asset of the life business fund of an assurance company on the day on which an accounting period of the company ends shall, subject to the subsequent provisions of this section, be deemed to have been disposed of and immediately reacquired by the company on that day at the asset's market value on the said day.

(3) Subsection (2) shall not apply to—

(a) (i) assets specified in section 19 of the Capital Gains Tax Act, 1975 , or

(ii) assets to which the said section 19 is applied by any provision of the Capital Gains Tax Acts,

(b) assets linked solely to pension business or special investment business, or

(c) assets of the foreign life assurance fund,

and, in relation to other assets which are not assets linked solely to life assurance business (excluding pension business, general annuity business and special investment business), shall apply only to the relevant chargeable fraction for an accounting period of each class of asset:

Provided that, for the purposes of this section, in applying paragraph 6 of Part I of Schedule 1 to the Capital Gains Tax Act, 1975 , to the computation of gains accruing to an assurance company on the disposal, on the day on which an accounting period of the company ends, of assets which are not linked solely to life assurance business (excluding pension business, general annuity business or special investment business), the company shall be deemed to have acquired all of the assets of its life business fund, other than the assets it acquired in that accounting period, at their respective market values on the day immediately before the day on which that period began.”,

(iii) in subsection (4) (a) (i), by the substitution for “(excluding pension business and general annuity business)” of “(excluding pension business, general annuity business and special investment business), special investment business”,

(iv) in subsections (4) (b) (i) (I) and (5) (a), by the insertion after “foreign life assurance business” of “or special investment business”,

and

(v) by the substitution for subsections (6) and (7) of the following subsection:

“(6) For the purposes of this section assets of the foreign life assurance fund or special investment fund and liabilities of the foreign life assurance business or special investment business shall be left out of account in determining the investment reserve.”,

(k) in section 50—

(i) by the substitution for subsection (1) of the following subsection:

“(1) This section has effect for the interpretation of sections 33 to 49, including sections 46A and 46B (inserted by the Finance Act, 1992 ) and sections 33B, 35A, 36A, 36B and 36C (inserted by the Finance Act, 1993), and this section.”,

and

(ii) in subsection (2), by the insertion of the following definitions:

“‘market value’ has the meaning assigned to it by section 49 of the Capital Gains Tax Act, 1975 ;”,

“‘special investment business’, ‘special investment fund’ and ‘special investment policy’ have the meanings assigned to them by section 36A;”,

and the said—

(A) subsection (1A) (other than the proviso thereto) and subsection (2) of section 33,

(B) paragraph (a) of subsection (5) of section 36,

(C) subsections (1) and (3) of section 43, and

(D) subparagraph (i) of paragraph (a), and clause (I) of subparagraph (i) of paragraph (b), of subsection (4), and paragraph (a) of subsection (5), of section 46A,

as so amended, are set out in the Table to this section.

TABLE

(1A) Where the life assurance business of an assurance company includes more than one of the following classes of business, that is to say:

(a) pension business,

(b) general annuity business,

(c) special investment business, and

(d) life assurance business (excluding such pension business, general annuity business and special investment business),

then, for the purposes of this Act, the business of each such class shall be treated as though it were a separate business and subsection (1) shall apply separately to each such class of business as if it were the only business of the company:

(2) Relief under subsection (1) shall not be given to any such company, so far as it would, if given in addition to all other reliefs to which the company is entitled, reduce the corporation tax borne by the company on the income and gains of its life business for any accounting period to less than would have been paid if the company had been charged to tax at the rate specified in section 1 (1) (b) (as amended by the Finance Act, 1990 ) in respect of that business under Case I of Schedule D; and where relief has been withheld in respect of any accounting period by virtue of this subsection, the excess to be carried forward by virtue of section 15 (2) shall be increased accordingly.

For the purposes of this subsection—

(a) any tax credit to which the company is entitled in respect of a distribution received by it shall be treated as an equivalent amount of corporation tax borne or paid in respect of that distribution; and

(b) any payment in respect of that credit under section 15 (4), 25 (set-off of losses etc. against franked investment income), 26 (set-off of loss brought forward or terminal loss against franked investment income of financial concerns), 33B(2) (inserted by the Finance Act, 1993) or 88 (3) shall be treated as reducing the tax so treated as borne or paid; and

(c) relief for the management expenses, if any, attributable to the life business, other than special investment business of a company shall be withheld before any relief for management expenses attributable to the special investment business of the company is withheld; and

(d) (i) sections 34 (2), 35 and 38 shall, and

(ii) the proviso (inserted by the Finance Act, 1993) to subsection (5) of section 16 shall not,

apply for the purposes of computing the profits of the life assurance business or the industrial assurance business, as the case may be, which would have been charged to tax under Case I of Schedule D.

The reference in paragraph 2 (1) of Schedule 1 to the Capital Gains Tax Act, 1975 (exclusion from consideration for disposal of sums chargeable to income tax), to computing income or profits or gains or losses shall not be taken as applying to a computation of a company's income for the purposes of this subsection.

(5) (a) Where the aggregate of the said unrelieved profits and the shareholders' part of the franked investment income exceeds the profits of the company in respect of its life business for the relevant accounting periods computed in accordance with the provisions of Case I of Schedule D as extended by sections 35 and 38 (whether or not the company is charged to tax under that Case) the said part shall be the amount of that excess or the unrelieved profits whichever is the less, and

(1) Any income of an overseas life assurance company from the investments of its life assurance fund (excluding the pension fund, general annuity fund and special investment fund, if any), wherever received, shall, to the extent provided in this section, be deemed to be profits comprised in Schedule D and shall be charged to corporation tax under Case III of Schedule D.

(3) A portion only of the income from the investments of the life assurance fund (excluding the pension fund, general annuity fund and special investment fund, if any) shall be charged in accordance with subsection (1), and for any accounting period that portion shall be determined by the formula—

A × B

______

C

where—

A is the total income from those investments for that period,

B is the average of the liabilities for that period to policy holders resident in the State and to policy holders resident outside the State whose proposals were made to the company at or through its branch or agency in the State, and

C is the average of the liabilities for that period to all the company's policy holders,

but any reference in this subsection to liabilities does not include liabilities in respect of special investment, general annuity or pension business.

(i) the denominator is the average of such of the opening and closing life business liabilities as are liabilities in respect of benefits to be determined by reference to the value of linked assets, other than assets linked solely to life assurance business (excluding pension business, general annuity business and special investment business), special investment business or pension business and assets of the foreign life assurance fund, and

(I) the average of the opening and closing life business liabilities, other than liabilities in respect of benefits to be determined by reference to the value of linked assets and liabilities of the foreign life assurance business or special investment business, and

(5) (a) In this subsection “liabilities” does not include the liabilities of the foreign life assurance business or special investment business.