Finance Act, 1993

Foreign life assurance and deferred annuities: taxation and returns.

24.—Part IV of the Capital Gains Tax Act, 1975 , is hereby amended by the insertion after section 20 of the following section:

“20A.—(1) (a) (i) Subsection (2) applies to any policy of assurance or contract for a deferred annuity on the life of any person which is a policy issued or a contract made, as the case may be, on or after the 20th day of May, 1993, otherwise than by an assurance company which is—

(I) resident in the State, or

(II) chargeable under Case III of Schedule D, by virtue of section 43 of the Corporation Tax Act, 1976 , in respect of its income from the investment of its life assurance fund.

(ii) In this paragraph ‘assurance company’ and ‘life assurance fund’ have the meanings assigned to them, respectively, in section 50 (2) of the Corporation Tax Act, 1976 .

(b) (i) For the purposes of this section, a policy of assurance or contract for a deferred annuity on the life of any person, being a policy issued or a contract made before the 20th day of May, 1993, shall be treated as a policy issued or contract made, as the case may be, after that date if there is a variation of the policy or contract on or after that date which directly or indirectly increases the benefits secured by, or extends the term of, the policy or contract, as the case may be.

(ii) For the purposes of subparagraph (i), if a policy of assurance which was issued, or a contract which was made, before the 20th day of May, 1993, provides an option to have another policy or contract substituted for it or to have any of its terms changed, then any change in the terms of the policy or contract which is made in pursuance of the option shall be deemed to be a variation of the policy or contract, as the case may be.

(c) Subject to subsection (2), this section shall be construed together with subsections (3) and (4) of section 20, as if the said subsection (3) were not subject to subsection (2) of section 20.

(2) (a) In this subsection ‘a relevant gain’ means a chargeable gain arising on a disposal of, or an interest in, the rights under any policy of assurance or contract for a deferred annuity to which this subsection applies, including a disposal by a person who is not the original beneficial owner of those rights and who acquired them, or an interest in them, for a consideration in money or money's worth.

(b) Section 20 (2) shall not have effect in respect of any disposal of, or any interest in, the rights under any policy of assurance or contract for a deferred annuity to which this subsection applies.

(c) A relevant gain shall be computed as if section 3 of the Capital Gains Tax (Amendment) Act, 1978 , had not been enacted.

(d) Notwithstanding section 5 (1), the total amount of chargeable gains accruing to a person chargeable in a year of assessment, after deducting any allowable losses, shall not be less than the total amount of any relevant gains accruing to the person in that year and, accordingly, any deduction for allowable losses made in computing the total amount of chargeable gains so accruing shall not exceed the total amount of chargeable gains so accruing which are not relevant gains.

(e) Notwithstanding section 13 (4) or 16, an individual shall be charged to capital gains tax on the amount of any relevant gains accruing to him.

(3) As respects a policy of assurance or a contract for a deferred annuity to which subsection (2) applies, section 230 of the Finance Act, 1992 , shall apply, with any necessary modification—

(a) to every person carrying on in the State a trade or business in the ordinary course of the operations of which he acts as an intermediary in or in connection with the issue of such a policy, or the making of such a contract, in the same manner as it applies to every intermediary within the meaning of that section, and

(b) to a person resident or ordinarily resident in the State who is entitled to any amount payable under such a policy or contract, being an amount payable otherwise than in the event of the death of a person specified in the terms of the policy or the contract, as the case may be, in the same manner as it applies to a person resident in the State opening an account, in which a deposit which he beneficially owns is held, at a location outside the State,

as if references in that section to—

(i) a deposit were references to any payment made by a person resident or ordinarily resident in the State in respect of such a policy or contract;

(ii) a foreign account were references to such a policy or contract;

(iii) the opening of a foreign account were references to the issue of such a policy or the making of such a contract; and

(iv) a relevant person were references to a person who in the normal course of his trade or business would issue such a policy or make such a contract.”.