S.I. No. 85/2005 - Health Contributions (Refunds) Regulations 2005

STATUTORY INSTRUMENTS.

S.I. No. 85 of 2005 .

HEALTH CONTRIBUTIONS (REFUNDS) REGULATIONS 2005.

S.I. No. 85 of 2005 .

HEALTH CONTRIBUTIONS (REFUNDS REGULATIONS 2005.

The Minister for Health and Children, in exercise of the powers conferred on her by section 7A (as amended by section 16 of the Social Welfare (Miscellaneous Provisions Act 2002 (No. 8 of 2002)) of the Health Contributions Act 1979 (No. 4 of 1979) hereby makes the following Regulations:

Citation and construction

1. These Regulations may be cited as the Health Contributions (Refunds) Regulations, 2005.

2. The Health Contributions Regulations 1979 ( S.I. No. 107 of 1979 ) as amended by the Health Contributions (Amendment) Regulations 1980 ( S.I. No. 87 of 1980 ), the Health Contributions (Amendment) Regulations 1983 ( S.I. No. 55 of 1983 ), the Health Contributions (Amendment Regulations 1984 ( S.I. No. 73 of 1984 ), the Health Contributions (Amendment) Regulations 1985 ( S.I. No. 233 of 1985 ), the Health Contributions (Amendment) Regulations 1986 ( S.I. No. 102 of 1986 ), the Health Contributions (Amendment) Regulations 1988 ( S.I. No. 51 of 1988 ), the Health Contributions (Amendment) Regulations 1989 ( S.I. No. 70 of 1989 ), the Health Contributions (Amendment Regulations 1999 ( S.I. No. 81 of 1999 ) and the Health Contributions (Amendment) Regulations 2003 ( S.I. No. 719 of 2003 ) are amended by inserting the following after article 7:

“Refund of contributions in respect of certain pension payments”

7A.  (1)  In this article—

‘pension payment’ means a payment, specified in subsection (3) (inserted by section 16 of the Social Welfare (Miscellaneous Provisions) Act 2002 ( No. 8 of 2002 ) of Section 7A of the Act, made in any contribution year commencing on or after 1 January 2003.

‘allowable pension payment’ in relation to a contribution year and an individual, means the amount of a pension payment made by the insured person on or after January 1, 2003, to the extent to which, as the case may be—

(a) it is, by virtue of section 774 or 776 of the Taxes Consolidation Act 1997 (No. 39 of 1997) allowed as a deduction from emoluments for the purposes of an assessment to income tax on the individual under Schedule E of the Income Tax Acts for the year of assessment corresponding to the contribution year, or

(b) it is, by virtue of section 787 or 787C (inserted by the Pensions (Amendment) Act 2002 ) of the Taxes Consolidation Act 1997 , deducted from or set off against the relevant earnings within the meaning of section 787 or 787B (as so inserted) of that Act, as is appropriate in the circumstances, of the individual for the year of assessment which corresponds to the contribution year,

other than an amount of a pension payment to which Regulations 41 and 42 of the Income Tax (Employments) (Consolidated) Regulations 2001 ( S.I. No. 559 of 2001 ) applies.

(2) Subject to these Regulations where in any contribution year commencing on or after 1 January 2002, a health contribution under section 6 of the Health Contribution Act 1979 (No. 4 of 1979) is paid by an individual and that person has also made a pension payment such amount of contribution, if any, as is determined in accordance with this article, may be returned to that person by the Minister or the Collector-General, as the case may require, if application to that effect is made in writing to the Minister or the Collector-General, as appropriate, within such time as he or she may determine.

(3) The amount of health contribution to be returned under sub-article (2) in relation to a contribution year shall be calculated in accordance with the formula:

P × R

where

P  is an amount of the individual's reckonable emoluments for the contribution year which is equal to the allowable pension payment in relation to that year and

R  is the rate of health contribution for that contribution year.

EXPLANATORY NOTE.

(This note is not part of the Instrument and does not purport to be a legal interpretation.)

These Regulations amend the Health Contributions Regulations 1979 which provide, inter alia, for the estimation determination, collection etc. of health contributions payable by individuals within the PAYE system who are not in insurable employment e.g. company directors. Subsection (3) (inserted by the Social Welfare (Miscellaneous Provisions) Act 2002 ) of Section 7A of the Health Contribution Act 1979 provides for the return of Health Contributions where a person makes a contribution towards a pension product defined in that subsection. The pension products in question are occupational pension schemes retirement annuity contracts (RACs) and Personal Retirement Savings Accounts (PRSAs).

These Regulations, which apply to pension contributions paid on or after 1 January 2003, outline the circumstances in which a return of the Health Contributions is to be made and the basis for calculating the amount to be returned. No amount is to be returned where tax relief (and relief from health contributions) in respect of the pension payment has already been given under the “net pay” arrangement. Under such arrangement, employers calculate liability to tax, PRSI and Health Contribution on net pay after the pension payment has been deducted from gross pay.

Where these Regulations apply, the amount to be repaid for any particular contribution year will be determined by reference to the amount of the pension payment allowable for tax purposes for that year. As pension payments may, in some instances, be carried back to the previous year for tax purposes (i.e. payments made on or before 31 October in a year), the first year for which refunds can be claimed is the year 2002 i.e. in respect of pension payments made between 1 January 2003 and 31 October 2003.