Finance Act 2011

Retirement benefits.

19.— (1) Chapter 1 of Part 30 of the Principal Act is amended—

(a) in section 772(3A) by substituting the following for paragraph (a):

“(a) Subject to paragraph (aa), the Revenue Commissioners shall not approve a retirement benefits scheme for the purposes of this Chapter unless it appears to them that the scheme provides for any individual entitled to a pension under the scheme or, as the case may be, where the pension or part of the pension is payable in accordance with a pension adjustment order, the spouse or former spouse of such an individual to whom the pension or part of the pension is so payable (in this subsection referred to as the ‘relevant individual’), to opt, on or before the date on which that pension would otherwise become payable, for the transfer, on or after that date, to—

(i) the relevant individual, or

(ii) an approved retirement fund,

of an amount equivalent to the amount determined by the formula—

A — B

where—

A is the amount equal to the value of the relevant individual’s accrued rights under the scheme (including accrued rights which relate to additional voluntary contributions under the scheme) exclusive of any lump sum paid in accordance with subsection (3)(f), and

B is the amount or value of assets which the trustees, administrators or other person charged with the management of the scheme (in this section referred to as ‘the trustees’) would, if the assumptions in paragraph (b) were made, be required, in accordance with section 784C, to transfer to an approved minimum retirement fund held in the name of the relevant individual or to apply in purchasing an annuity payable to the relevant individual with effect from the date of the exercise of the option.”,

(b) in section 772(3A) by inserting the following after paragraph (a):

“(aa) In the case of a retirement benefits scheme that is a defined benefit arrangement within the meaning of section 787O(1), paragraph (a) shall, with any necessary modifications, apply in relation to an individual entitled to a pension under the scheme (other than a proprietary director of a company to which the scheme relates) as if—

(i) the reference in that paragraph to any relevant individual entitled to a pension under the scheme were a reference to any individual entitled to a pension under the scheme who is an individual entitled to rights arising from additional voluntary contributions to the scheme, and

(ii) A in the formula in that paragraph was the amount equal to the value of the individual’s accrued rights under the scheme which relate to additional voluntary contributions paid by that individual exclusive of any part of that amount paid by way of a lump sum in accordance with subsection (3)(f) in conjunction with the scheme rules.

(ab) (i) In this paragraph ‘deferred annuity option’ means the option provided to an individual who is a member of a retirement benefits scheme to defer, in accordance with Revenue e-Brief No. 65/08 entitled ‘Deferral of Annuity Purchase’ issued by the Revenue Commissioners on 22 December 2008, the purchase of an annuity from a company carrying on the business of granting annuities on human life.

(ii) An individual entitled to a pension under a retirement benefits scheme approved by the Revenue Commissioners before the date of passing of the Finance Act 2011 who, before that date, has exercised a deferred annuity option may opt in accordance with paragraph (a) within the period of one month from that date, where on or after that date the rules of the scheme are altered to enable such an option.

(iii) For the purposes of this paragraph, where an individual has exercised a deferred annuity option, the purchase of the annuity may be further deferred for a period of one month from the date of passing of the Finance Act 2011.”,

(c) in section 772(3B)(a)(ii) by deleting “and”,

(d) in section 772(3B)(a) by inserting the following after subparagraph (ii):

“(iia) in the case of an individual referred to in subsection (3A)(ab)(ii) (in this paragraph referred to as the ‘first-mentioned individual’)—

(I) the reference in subsection (2)(ii) of section 784C to an amount equivalent to the amount determined by the formula in that subsection were a reference to an amount equal to €63,500,

(II) the reference in subsection (4)(a) of section 784C to specified income per annum of an amount equal to the amount determined by the formula in that subsection were a reference to specified income per annum of €12,700, and

(III) the reference in subsection (6A) of section 784C to the individual were a reference to the first-mentioned individual and the reference in that subsection to the transfer, before the date of passing of the Finance Act 2011, of the amount referred to as B in the formula in section 784(2A) to an approved minimum retirement fund in respect of the individual, were a reference to the transfer, within the period of time referred to in subsection (3A)(ab)(ii), of the amount referred to as B in the formula in subsection (3A)(a) to an approved minimum retirement fund in respect of the first-mentioned individual.”,

and

(e) in section 772(3B)(b) by substituting “other than in the case of an individual referred to in subsection (3A)(aa)” for “in the case of a proprietary director”.

(2) Chapter 2 of Part 30 of the Principal Act is amended—

(a) in section 784A(1BA) by substituting “5” for “3” in the formula in paragraph (c),

(b) in section 784C(2) by substituting the following for paragraph (b):

“(b) apply in the purchase of an annuity payable to the individual,

shall be the lesser of—

(i) the amount referred to as A in that formula, and

(ii) an amount equivalent to the amount determined by the formula—

SPC × 52 × 10

where SPC is the weekly rate of State Pension (Contributory), as set out in column (2) of Part 1 of Schedule 2 to the Social Welfare Consolidation Act 2005 , payable in the State at the date of the exercise of the option, and where the amount so determined is not a multiple of €100 the amount shall, as the case may be, be rounded up or down to the nearest €100.”,

(c) in section 784C(3)(a) by substituting “and” for “or”,

(d) in section 784C(3) by substituting the following for paragraph (b):

“(b) an amount equivalent to the amount determined by the formula in subsection (2)(ii) if SPC in that formula was the weekly rate of State Pension (Contributory), as set out in column (2) of Part 1 of Schedule 2 to the Social Welfare Consolidation Act 2005 , payable in the State at the date of the exercise of the most recent of the options referred to in this subsection.”,

(e) in section 784C(4) by substituting the following for paragraph (a):

“(a) Where, at the date of exercise of an option under section 784(2A), the individual by whom the option is exercised is in receipt of specified income per annum of an amount equivalent to the amount determined by the formula—

SPC × 52 × 1.5

where SPC is the weekly rate of State Pension (Contributory), as set out in column (2) of Part 1 of Schedule 2 to the Social Welfare Consolidation Act 2005 , payable in the State at the date of the exercise of the option (and where the amount so determined is not a multiple of €100 the amount shall, as the case may be, be rounded up or down to the nearest €100), the amount referred to as B in the formula in section 784(2A) shall be nil.”,

(f) in section 784C by substituting the following for subsection (6):

“(6) Where the individual referred to in subsection (2)—

(a) attains the age of 75 years,

(b) is in receipt of specified income referred to in subsection (4) at any date (in this paragraph referred to as the ‘first-mentioned date’) after the date of the exercise of an option under section 784(2A) of an amount which would, if the option had been exercised on the first-mentioned date, have resulted in B in the formula in section 784(2A) being nil, or

(c) dies,

the approved minimum retirement fund shall, thereupon, become an approved retirement fund and section 784A, subsections (1) and (5) of section 784B and section 784E shall apply accordingly.”,

and

(g) in section 784C by inserting the following after subsection (6):

“(6A) Where before the date of passing of the Finance Act 2011, the individual referred to in subsection (2) has exercised an option in accordance with section 784(2A) and the person with whom the annuity contract is made has, before that date, transferred the amount referred to as B in the formula in that section to an approved minimum retirement fund in respect of that individual, subsection (6) shall apply for the period of 3 years from the date of passing of the Finance Act 2011 as if the following paragraph were substituted for paragraph (b) of that subsection:

‘(b) is in receipt of specified income of €12,700 at any time in the period of 3 years from the date of passing of the Finance Act 2011, or’.”.

(3) Chapter 2C of Part 30 of the Principal Act is amended—

(a) in section 787O(1) in the definition of “maximum tax-relieved pension fund” by substituting “7 December 2005” for “the specified date”,

(b) in section 787O(1) in the definition of “personal fund threshold” by substituting the following for paragraph (a):

“(a) (i) where the individual is an individual to whom the Revenue Commissioners have, before the specified date, issued a certificate in accordance with section 787P(5), the amount stated in that certificate as being the individual’s personal fund threshold, and

(ii) in any other case, for the year of assessment 2010, as on and from the specified date, and for the year of assessment 2011, the lesser of—

(I) €5,418,085, and

(II) (A) where no benefit crystallisation event in relation to the individual has occurred on or after 7 December 2005 and the individual has uncrystallised pension rights on the specified date, the amount of the uncrystallised pension rights on the specified date in relation to the individual, where the amount of those rights on that date exceed the standard fund threshold, or

(B) where one or more than one benefit crystallisation event in relation to the individual has occurred on or after 7 December 2005 and the individual has uncrystallised pension rights on the specified date, the aggregate of the amounts crystallised by those benefit crystallisation events and the amount of the uncrystallised pension rights on the specified date in relation to the individual, where the aggregate amount of those crystallised and uncrystallised rights exceed the standard fund threshold, and”,

(c) in section 787O(1) in paragraph (b) of the definition of “personal fund threshold” by substituting “year of assessment 2011” for “year of assessment 2006”,

(d) in section 787O(1) by substituting the following for the definition of “specified date”:

“‘specified date’ means 7 December 2010;”,

(e) in section 787O(1) in the definition of “standard fund threshold” by substituting the following for paragraph (a):

“(a) for the year of assessment 2010, as on and from the specified date, and for the year of assessment 2011, €2,300,000, and”,

(f) in section 787O(1) in paragraph (b) of the definition of “standard fund threshold” by substituting “year of assessment 2011” for “year of assessment 2006”,

(g) in section 787O(2) by substituting the following for paragraph (b):

“(b) Where the administrator of a relevant pension arrangement has, before the specified date, used a valuation factor (in this subsection referred to as the ‘first-mentioned factor’) other than the relevant valuation factor referred to in paragraph (a) then, in such a case, the first-mentioned factor is the relevant valuation factor for the purposes of this Chapter and Schedule 23B.”,

(h) in section 787O(2) by deleting paragraphs (c) and (d),

(i) in section 787O(5)(b) by substituting “7 December 2005” for “specified date” in each place,

(j) in section 787P by substituting the following for subsection (1):

“(1) An individual’s maximum tax-relieved pension fund shall not exceed—

(a) the standard fund threshold, or

(b) the personal fund threshold, where—

(i) the condition set out in subsection (2) is met and the Revenue Commissioners have issued a certificate in accordance with subsection (5) or a revised certificate in accordance with subsection (6), or

(ii) the Revenue Commissioners have, before the specified date, issued a certificate in accordance with subsection (5).”,

(k) in section 787P(5) by substituting “Subject to subsection (6), the Revenue Commissioners” for “The Revenue Commissioners”,

(l) in section 787P(5) by substituting the following for all of the words from “shall, on being satisfied” to the end of the provision:

“shall, within 30 days of receipt of the notification or, as the case may be, the late notification, or such longer time as they may require for the purposes of this subsection, issue a certificate to the individual stating the amount of the personal fund threshold.”,

(m) in section 787P by inserting the following after subsection (5):

“(6) Notwithstanding subsection (5), the Revenue Commissioners may at any time withdraw a certificate issued in accordance with that subsection (in this subsection referred to as the ‘first-mentioned certificate’) and issue a revised certificate if, following the issue of the first-mentioned certificate, the Commissioners are not satisfied that the calculation of the personal fund threshold contained in the notification referred to in subsection (2) or, as the case may be, the late notification referred to in subsection (4) was correct.”,

(n) in section 787Q(1) by substituting “7 December 2005” for “the specified date”,

(o) in section 787R by substituting the following for subsection (2):

“(2) The persons liable for income tax charged under subsection (1) shall be the administrator of the relevant pension arrangement under which the benefit crystallisation event arises and the individual in relation to whom the benefit crystallisation event occurs and their liability shall be joint and several.”,

(p) in section 787R(4)—

(i) by deleting “on or after the date of passing of the Finance Act 2006 ”,

(ii) in paragraph (b) by substituting “7 December 2005” for “the specified date”, and

(iii) in paragraph (d) by inserting “whether issued before or after the specified date, or, as the case may be, a copy of the revised certificate issued by the Commissioners under section 787P(6),” after “under section 787P(5),”,

(q) in section 787S by substituting the following for subsection (1):

“(1) The administrator of a relevant pension arrangement shall, within 3 months of the end of the month in which the benefit crystallisation event giving rise to the chargeable excess occurs, make a return to the Collector-General which shall contain—

(a) the name and address of the administrator,

(b) the name, address and PPS Number of the individual in relation to whom the benefit crystallisation event has occurred,

(c) details of the relevant pension arrangement under which the benefit crystallisation event giving rise to the chargeable excess has occurred,

(d) the amount of, and the basis of calculation of, the chargeable excess arising in respect of the benefit crystallisation event, and

(e) details of the tax which the administrator is required to account for in relation to the chargeable excess.”,

(r) in section 787S by deleting subsection (2), and

(s) in section 787S(7)(b) by substituting “0.0219 per cent” for “0.0273 per cent”.

(4) Chapter 4 of Part 30 of the Principal Act is amended—

(a) in section 790A by inserting the following after subsection (3):

“(4) Notwithstanding subsection (2), for the purposes of subsection (1) the earnings limit for the year of assessment 2011 shall be €115,000.

(5) Notwithstanding subsection (2), for the purposes of subsection (1) the earnings limit for the year of assessment 2010 shall be deemed to be €115,000 for the purpose of determining how much of a contribution or qualifying premium, as the case may be, paid by an employee or an individual in the year of assessment 2011, is to be treated by virtue of section 774(8), 776(3), 787(7) or 787C(3), as the case may be, as paid in the year of assessment 2010.”,

and

(b) by substituting the following for section 790AA:

“Taxation of lump sums in excess of the tax free amount.

790AA.— (1) (a) In this section—

‘administrator’, in relation to a relevant pension arrangement, means the person or persons having the management of the arrangement and, in particular, but without prejudice to the generality of the foregoing, references to the administrator of a relevant pension arrangement include—

(i) an administrator within the meaning of section 770(1),

(ii) a person mentioned in section 784, lawfully carrying on the business of granting annuities on human life, including the appointed person mentioned in section 784(4A)(ii), and

(iii) a PRSA administrator within the meaning of section 787A(1);

‘excess lump sum’ shall be construed in accordance with paragraph (e);

‘relevant pension arrangement’ means any one or more of the following—

(i) a retirement benefits scheme, within the meaning of section 771, approved by the Revenue Commissioners for the purposes of Chapter 1,

(ii) an annuity contract or a trust scheme or part of a trust scheme approved by the Revenue Commissioners under section 784,

(iii) a PRSA contract, within the meaning of section 787A, in respect of a PRSA product, within the meaning of that section,

(iv) a qualifying overseas pension plan within the meaning of Chapter 2B,

(v) a public service pension scheme within the meaning of section 1 of the Public Service Superannuation (Miscellaneous Provisions) Act 2004 ,

(vi) a statutory scheme, within the meaning of section 770(1), other than a public service pension scheme referred to in paragraph (v);

‘specified date’ means 1 January 2011;

‘standard chargeable amount’ means the amount equivalent to the amount determined by the formula—

(SFT)— TFA

4

where—

SFT is the standard fund threshold, within the meaning of section 787O(1), for the year of assessment in which the lump sum is paid, and

TFA is the tax free amount;

‘standard rate’ means the standard rate of income tax in force at the time the lump sum is paid;

‘tax free amount’ means €200,000;

‘tax year’ means a year of assessment within the meaning of the Tax Acts.

(b) (i) For the purposes of this section, a reference to a lump sum is a reference to a lump sum that is paid to an individual under the rules of a relevant pension arrangement by means of commutation of part of a pension or of part of an annuity or otherwise.

(ii) Without prejudice to the generality of subparagraph (i), the reference in that subparagraph to the commutation of part of a pension or of part of an annuity shall, in a case where an individual opts in accordance with section 772(3A) or, as the case may be, section 784(2A), be construed as a reference to the commutation of part of the pension or, as the case may be, part of the annuity which would, but for the exercise of that option, be payable to the individual.

(c) For the purposes of this section references to a lump sum that is paid to an individual include references to a lump sum that is obtained by, given to, or made available to, an individual and references to a lump sum which was, or has, or had been paid to an individual shall be construed accordingly.

(d) For the purposes of this section—

(i) a lump sum (in this subsection referred to as the ‘first-mentioned lump sum’) shall be treated as paid before another lump sum (in this subsection referred to as the ‘second-mentioned lump sum’) if the first-mentioned lump sum is paid before the second-mentioned lump sum on the same day, and

(ii) a lump sum shall not be treated as paid at the same time as one or more than one other lump sum and, where but for this subsection they would be so treated, the individual to whom the lump sums are paid shall decide on the order in which they are to be deemed to be paid.

(e) For the purposes of this section the excess lump sum, if any, in respect of a lump sum that is paid to an individual on or after the specified date (in this paragraph referred to as the ‘current lump sum’) shall be—

(i) where no other lump sum has been paid to the individual on or after 7 December 2005, the amount by which the current lump sum exceeds the tax free amount, and

(ii) where, before the current lump sum was paid, one or more than one lump sum had been paid to the individual on or after 7 December 2005 (in this section referred to as the ‘earlier lump sums’), then—

(I) where the amount of the earlier lump sums is less than the tax free amount, the amount by which the aggregate of the amounts of the earlier lump sums and the current lump sum exceeds the tax free amount, and

(II) where the amount of the earlier lump sums is equal to or greater than the tax free amount, the amount of the current lump sum.

(2) Where a lump sum is paid to an individual on or after the specified date, the excess lump sum shall be regarded as income of the individual for the tax year in which the lump sum is paid and shall be chargeable to income tax in accordance with subsection (3).

(3) Subject to subsection (7)(b)—

(a) where the excess lump sum arises in accordance with subsection (1)(e)(i), (1)(e)(ii)(I) or (1)(e)(ii)(II) (in so far as the amount of the earlier lump sums referred to in subsection (1)(e)(ii)(II) is equal to the tax free amount), then—

(i) so much of the excess lump sum as does not exceed the standard chargeable amount shall be charged to income tax under Case IV of Schedule D at the standard rate, and

(ii) so much of the excess lump sum, if any, as exceeds the standard chargeable amount shall be regarded as—

(I) profits or gains accruing from an office or employment (and accordingly tax under Schedule E shall be charged on those payments, and tax so chargeable shall be computed under section 112(1)), and

(II) emoluments to which Chapter 4 of Part 42 applies, (in this section referred to as ‘relevant emoluments’).

(b) Where the excess lump sum arises in accordance with subsection (1)(e)(ii)(II) (in so far as the amount of the earlier lump sums referred to in that subsection is greater than the tax free amount), then—

(i) where the amount by which the earlier lump sums is greater than the tax free amount (in this paragraph referred to as the ‘first-mentioned amount’) is less than the standard chargeable amount—

(I) so much of the excess lump sum as does not exceed an amount equivalent to the difference between the standard chargeable amount and the first-mentioned amount shall be charged to income tax under Case IV of Schedule D at the standard rate, and

(II) so much of the excess lump sum, if any, as exceeds an amount equivalent to the difference between the standard chargeable amount and the first-mentioned amount, shall be relevant emoluments,

and

(ii) in any other case, the excess lump sum shall be relevant emoluments.

(4) The persons liable for income tax charged in accordance with paragraph (a)(i) or (b)(i)(I) of subsection (3) shall be the administrator of the relevant pension arrangement under which the lump sum arises and the individual in relation to whom the lump sum is paid and their liability shall be joint and several.

(5) A person referred to in subsection (4) shall be liable for any income tax referred to in that subsection whether or not that person, or any other person who is liable to the charge, is resident or ordinarily resident in the State.

(6) Where tax arising on an excess lump sum in accordance with paragraph (a)(i) or (b)(i)(I) of subsection (3) is paid—

(a) by the administrator of a relevant pension arrangement in whole or in part, then so much of the tax that is paid by the administrator shall itself be treated as forming part of the excess lump sum unless the lump sum paid to the individual under the relevant pension arrangement is reduced so as to fully reflect the amount of tax so paid or the administrator is reimbursed by the individual in respect of any tax so paid, or

(b) by the administrator of a relevant pension arrangement of a kind described in paragraphs (v) and (vi) of the definition of ‘relevant pension arrangement’ in subsection (1), then—

(i) the amount of tax so paid shall be a debt due to the administrator from the individual or, where the individual is deceased, from his or her estate, and

(ii) the administrator may appropriate so much of the individual’s lump sum entitlements under that relevant pension arrangement, and the individual shall allow such appropriation, for the purposes of reimbursing the administrator in respect of the tax so paid.

(7) (a) The administrator of a relevant pension arrangement shall deduct tax from an excess lump sum payment in accordance with this section and remit such tax to the Collector-General.

(b) In so far as any part of an excess lump sum—

(i) is to be regarded as income of the individual for a tax year and charged to income tax at the standard rate in accordance with paragraph (a)(i) or (b)(i)(I) of subsection (3)—

(I) such income—

(A) shall not be reckoned in computing total income for the purposes of the Tax Acts, and

(B) shall be computed without regard to any amount deductible from, or deductible in computing, income for the purposes of the Tax Acts,

(II) the charging of that income in such manner shall be without any relief or reduction specified in the Table to section 458 or any other deduction from that income, and

(III) section 188 shall not apply as regards income so charged,

or

(ii) is to be regarded by virtue of this section as relevant emoluments, the administrator of the relevant pension arrangement under which the lump sum is paid shall deduct tax from the payment at the higher rate for the tax year in which the payment is made unless the administrator has received from the Revenue Commissioners a certificate of tax credits and standard rate cut-off point or a tax deduction card for that year in respect of the individual.

(8) The administrator of a relevant pension arrangement who deducts tax from an excess lump sum in accordance with paragraph (a)(i) or (b)(i)(I) of subsection (3) shall, within 3 months of the end of the month in which the lump sum giving rise to the excess lump sum is paid, make a return to the Collector-General which shall contain—

(a) the name and address of the administrator,

(b) the name, address and PPS Number of the individual in relation to whom the lump sum has been paid,

(c) details of the relevant pension arrangement under which the lump sum giving rise to the excess lump sum has been paid,

(d) the amount of, and the basis of calculation of, the excess lump sum arising in respect of the lump sum, and

(e) details of the tax which the administrator is required to account for in relation to the excess lump sum.

(9) The tax which the administrator of a relevant pension arrangement is required to account for in relation to an excess lump sum (hereinafter referred to as the ‘relevant tax’) and which is required to be included in a return in accordance with subsection (8), shall be due at the time by which the return is due to be made and shall be paid by the administrator to the Collector-General and the relevant tax so due shall be payable by the administrator without the making of an assessment; but relevant tax that has become so due may be assessed on any person liable for the tax (whether or not it has been paid when the assessment is made) if that tax or any part of it is not paid on or before the due date.

(10) Where it appears to an officer of the Revenue Commissioners that there is any amount of relevant tax in relation to an excess lump sum which ought to have been but has not been included in a return, or where the officer is dissatisfied with any return, then the officer may make an assessment on any person liable for the relevant tax to the best of his or her judgment, and any amount of relevant tax in relation to an excess lump sum due under an assessment made by virtue of this subsection shall be treated for the purposes of interest on unpaid tax as having been payable at the time by which the return concerned was due to be made.

(11) Where any item has been incorrectly included in a return as an excess lump sum, then an officer of the Revenue Commissioners may make such assessments, adjustments or set-offs as may in his or her judgment be required for securing that the resulting liabilities to tax, including interest on unpaid tax, whether of the administrator of a relevant pension arrangement or the individual, are, so far as possible, the same as they would have been if the item had not been so included.

(12) Any relevant tax assessed on a person under this section shall be due within one month after the issue of the notice of assessment (unless that tax is due earlier under subsection (9)) subject to—

(a) any appeal against the assessment, or

(b) any application under subsection (14),

but no such appeal or application, as the case may be, shall affect the date when any amount is due under subsection (9).

(13) (a) The provisions of the Income Tax Acts relating to—

(i) assessments to income tax, and

(ii) appeals against such assessments (including the rehearing of appeals and the statement of a case for the opinion of the High Court),

shall, in so far as they are applicable, apply to the assessment of relevant tax.

(b) Any amount of relevant tax payable in accordance with this section without the making of an assessment shall carry interest at the rate of 0.0219 per cent for each day or part of a day from the date when the amount becomes due and payable until payment.

(c) Subsections (3) to (5) of section 1080 shall apply in relation to interest payable under paragraph (b) as they apply in relation to interest payable under section 1080.

(d) In its application to any relevant tax charged by any assessment made in accordance with this section, section 1080 shall apply as if subsection (2)(b) of that section were deleted.

(14) (a) Where the administrator of a relevant pension arrangement reasonably believed, in respect of a lump sum paid to an individual, that—

(i) the lump sum did not give rise to an income tax liability, or

(ii) the amount of the income tax liability arising on the excess lump sum was less than the actual amount,

the administrator may apply to the Revenue Commissioners in writing to have that tax liability or, as the case may be, the amount of the difference between the amount which the administrator believed to be the amount of the tax liability and the actual amount (in this subsection referred to as the ‘referable tax liability’) discharged.

(b) Where, following receipt of an application referred to in paragraph (a), the Revenue Commissioners are of the opinion that in all of the circumstances it would not be just and reasonable for the administrator to be made liable to the referable tax liability they may discharge the administrator from that liability and shall notify the administrator in writing of that decision.

(c) Without prejudice to any other circumstance in which an individual will be liable to discharge a tax liability due in respect of an excess lump sum, where an administrator of a relevant pension arrangement is discharged from a referable tax liability in accordance with paragraph (b), the individual in respect of whom the income tax charge arises shall become liable for the tax.

(15) Every return referred to in this section shall be in a form specified or authorised by the Revenue Commissioners and shall include a declaration to the effect that the return is correct and complete.

(16) Subsection (2) of section 787G shall apply in respect of any income tax deducted from an excess lump sum by virtue of subsection (3) of this section, by an administrator of a relevant pension arrangement of a kind described in paragraph (iii) of the definition of ‘relevant pension arrangement’ in subsection (1)(a) of this section, as it applies to income tax referred to in subsection (2) of section 787G.

(17) Where a lump sum is paid to an individual, on or after the specified date, under the rules of a relevant pension arrangement of a kind described in paragraph (iv) of the definition of ‘relevant pension arrangement’ in subsection (1)(a), the excess lump sum, if any, shall be charged to tax under Case IV of Schedule D for the tax year in which the lump sum is paid to that individual at the rate or rates determined in accordance with subsection (3).

(18) This section shall not apply to—

(a) a lump sum that is paid to—

(i) a widow or widower,

(ii) children,

(iii) dependants, or

(iv) personal representatives,

of a deceased individual, or

(b) the balance of a lump sum paid to an individual in accordance with paragraph 5 of Appendix A of the Department of Finance Circular 12/09, dated 30 April 2009, entitled ‘Incentivised Scheme of Early Retirement’.

(19) Section 781 shall have effect notwithstanding the provisions of this section.”.

(5) Schedule 23B to the Principal Act is amended—

(a) in paragraph 2(d) by substituting “7 December 2005” for “the specified date”,

(b) in paragraph 4 by substituting “7 December 2005” for “the specified date” in each place, and

(c) in paragraph 5 by substituting the following for subparagraph (2):

“(2) The adjustment referred to in subparagraph (1) is the amount crystallised by the previous benefit crystallisation event multiplied by the higher of 1 and the number determined by the formula—

A

B

where—

A is the standard fund threshold or, as the case may be, the personal fund threshold at the date of the current event, and

B is the standard fund threshold or, as the case may be, the personal fund threshold at the date of the previous benefit crystallisation event,

and where an individual did not have a personal fund threshold at the date of the previous benefit crystallisation event, the standard fund threshold at that date shall be used for B in the formula.”.

(6) Notwithstanding paragraph (a) of the definition of “standard fund threshold” in section 787O(1) of the Principal Act (as amended by subsection (3)(e)), for the purposes of the definition of “lump sum limit” in subsection (1)(a) of section 790AA (before the amendment of that section by subsection (4)(b)) of that Act, “standard fund threshold” shall mean €5,418,085 for the year of assessment 2010.

(7) (a) Subsection (1) and paragraph (g) of subsection (2) have effect as on and from the date of passing of this Act.

(b) Paragraph (a) of subsection (2) has effect as respects an amount regarded as a distribution of a specified amount in section 784A(1BA) of the Principal Act made on or after 31 December 2010.

(c) Paragraphs (b) to (f) of subsection (2) shall apply as respects the exercise of an option in accordance with section 772(3A)(a), 784(2A) or 787H(1) of the Principal Act on or after the date of passing of this Act.

(d) Subsections (3), (5) and (6) have effect as on and from 7 December 2010.

(e) Subsection (4) has effect as on and from 1 January 2011.

(f) Notwithstanding the provisions of Part 30 of the Principal Act, a retirement benefits scheme which was approved by the Revenue Commissioners before the date of passing of this Act, shall not cease to be an approved scheme because the rules of the scheme are altered on or after that date to enable an individual to whom the scheme applies to exercise an option under subsection (3A)(a) (as amended by subsection (1) (a)) of section 772 of the Principal Act, which that individual would be in a position to exercise in accordance with the terms of that subsection as regards a scheme approved on or after the date of passing of this Act and, as regards such a scheme, the provisions of this section shall apply as if the scheme were one approved on or after that date.