|
|
|
Taxation of certain perquisites: employees of authorised insurers and tied health insurance agents
|
| |
8. Chapter 1 of Part 5 of the Principal Act is amended by inserting the following section after section 112A:
|
|
| |
“Taxation of certain perquisites: employees of authorised insurers and tied health insurance agents
|
|
| |
112AA. (1) In this section—
|
|
| |
‘authorised insurer’ has the meaning assigned to it by section 470;
|
|
| |
‘emoluments’ has the meaning assigned to it by section 983;
|
|
| |
‘employee’ includes an office holder and any person who is an employee within the meaning of section 983;
|
|
| |
‘relevant contract’ means a contract of insurance, or any other agreement, arrangement or transaction, as the case may be, which provides specifically, whether in conjunction with other benefits or not, for the reimbursement or discharge, in whole or in part, of—
|
|
| |
(a) actual health expenses (within the meaning of section 469), being a contract of medical insurance, or
|
|
| |
(b) dental expenses other than expenses in respect of routine dental treatment (within the meaning of section 469), being a contract of dental insurance;
|
|
| |
‘relevant contract price’ is the amount that would be payable, by an individual who is neither a relevant employee nor connected with a relevant employee, under a relevant contract, by way of a bargain made at arm’s length, before deducting any amount the individual would have been entitled to deduct and retain by virtue of section 470(3)(a);
|
|
| |
‘relevant employee’ means an employee of—
|
|
| |
(a) an authorised insurer,
|
|
| |
(b) a tied health insurance agent, or
|
|
| |
(c) any person connected with a person referred to in paragraph (a) or (b);
|
|
| |
‘tied health insurance agent’ means any person who, directly or indirectly, enters into an agreement or arrangement with an authorised insurer—
|
|
| |
(a) whereby that person undertakes to refer all proposals of insurance, made under a relevant contract, to the authorised insurer with whom the person has made or entered into the agreement or arrangement, or
|
|
| |
(b) which restricts in any way that person’s freedom to refer proposals of insurance, made under a relevant contract, to an authorised insurer other than the authorised insurer with whom the agreement or arrangement has been made or entered into.
|
|
| |
(2) This section applies where—
|
|
| |
(a) a relevant employee enters into a relevant contract, or
|
|
| |
(b) an individual connected with a relevant employee enters into a relevant contract,
|
|
| |
arising from, or in connection with, the employment of the relevant employee.
|
|
| |
(3) Where this section applies in relation to a relevant contract—
|
|
| |
(a) an amount determined by the formula—
|
|
| |
(A - B)
|
|
| |
where—
|
|
| |
A is the relevant contract price for the year, and
|
|
| |
B is the sum of the amount paid, if any, for the year by the relevant employee and the connected individual, under the relevant contract,
|
|
| |
shall be treated as emoluments of the employment of the relevant employee in a year of assessment,
|
|
| |
(b) Chapter 3 of this Part shall not apply, and
|
|
| |
(c) section 112A shall not apply to the relevant employee or the employer of the relevant employee.
|
|
| |
(4) Where an amount is treated as emoluments in a year of assessment under this section—
|
|
| |
(a) for the purposes of section 470, the amount (referred to in this subsection and subsection (5) as the ‘notional payment amount’) shall be treated as if it was an amount paid—
|
|
| |
(i) under the relevant contract concerned to an authorised insurer by the relevant employee concerned, and
|
|
| |
(ii) in the year of assessment,
|
|
| |
and
|
|
| |
(b) subject to subsection (5), notwithstanding that the payment of the notional payment amount is deemed under paragraph (a) to occur after 6 April 2001—
|
|
| |
(i) section 470(3) shall not apply to the notional payment amount, and
|
|
| |
(ii) section 470(2) shall apply to the notional payment amount as if the relevant employee concerned had made a payment under a relevant contract of that amount to an authorised insurer.
|
|
| |
(5) Where an amount (in this subsection referred to as the ‘actual payment amount’) is paid under the relevant contract concerned by the relevant employee concerned or an individual connected to that employee—
|
|
| |
(a) section 470(2) shall apply subject to the following modifications:
|
|
| |
(i) a reference to a payment shall be construed as a reference to an amount being the sum of the notional payment amount and the actual payment amount;
|
|
| |
(ii) the amount by which the income tax to be charged on the individual for the year of assessment, other than in accordance with section 16(2), is reduced shall itself be reduced by the percentage of the relevant contract price which the actual payment amount represents,
|
|
| |
and
|
|
| |
(b) section 470(3) shall apply subject to the following modifications:
|
|
| |
(i) a reference to a payment shall be construed as a reference to an amount being the sum of the notional payment amount and the actual payment amount;
|
|
| |
(ii) the amount the individual shall be entitled to deduct and retain shall be reduced by the percentage of the relevant contract price which the notional payment amount represents.”.
|
