Finance Act, 2001

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Amendment of section 730A (profits of life business: new basis) of Principal Act.

69.—(1) Section 730A of the Principal Act is amended in subsection (1)—

(a) in the definition of “new basis business”—

(i) in paragraph (a) by the substitution for subparagraph (i) of the following:

“(i) all policies and contracts commenced by the assurance company on or after 1 January 2001 except those which refer to industrial assurance business, and”,

and

(ii) in paragraph (c) by the substitution for “from the time it began to carry on life business.” of “from the time it began to carry on life business;”,

(b) by the insertion after the definition of “new basis business” of the following:

“‘sinking fund or capital redemption business’ has the same meaning as in section 3 of the Insurance Act, 1936 .”,

and

(c) by the insertion after subsection (5) of the following:

“(6) Notwithstanding the provisions of Chapter 3 of Part 12, where an assurance company incurs a loss in respect of new basis business, the amount of the loss which may be set off against profits of any other business of the company shall not exceed such amount of those profits computed under the provisions of Case 1 of Schedule D and section 710.

(7) (a) This subsection applies to a company carrying on any mutual life assurance business.

(b) Subject to paragraph (c), in respect of each accounting period of a company to which this subsection applies, one-twentieth of the amount determined under subsection (8)(c) shall be treated as annual profits or gains within Schedule D and shall be chargeable to corporation tax under Case III of that Schedule.

(c) Where for an accounting period the value referred to in subsection (8)(c)(ii) is not less than such value at 31 December 2000, but exceeds the value referred to in subsection (8)(c)(i), an amount equal to one-twentieth of the excess may be deducted from annual profits or gains chargeable to corporation tax by virtue of paragraph (b), of the previous accounting period (so long as it commences on or after 1 January 2001) or a subsequent accounting period.

(8) (a) In this subsection ‘statutory accounts’, in relation to a company means—

(i) in the case of a company (in this definition referred to as the ‘resident company’) resident in the State, the profit and loss account and balance sheet of that company, and

(ii) in the case of a company (in this definition referred to as the ‘non-resident company’) not resident in the State but carrying on a trade in the State through a branch or agency, the profit and loss account and balance sheet of the company,

a report in respect of which is required to be made to the members of the company by an auditor appointed under section 160 of the Companies Act, 1963 , or under the law of the State in which the resident company or non-resident company is incorporated and which corresponds to that section.

(b) For the purposes of this subsection the liabilities of an assurance company attributable to any business at any time shall be ascertained by reference to the net liabilities of the company as valued by an actuary for the purposes of the statutory accounts in relation to the company.

(c) The amount referred to in subsection (7)(b) is—

(i) the total value at the end of the accounting period,

less—

(ii) the total value at the beginning of the accounting period,

of all funds the allocation of which to policyholders has not been determined; but in the case of an overseas life assurance company, the values referred to in subparagraphs (i) and (ii) at a time shall be multiplied by the following fraction—

where—

A   is the liabilities at that time to policyholders whose proposals were made to the company at or through its branch or agency in the State, and

B   is the liabilities at that time to all the company's policyholders.”.

(2) This section shall apply as respects accounting periods commencing on or after 1 January 2001.