Finance Act, 1972

Charge to tax in respect of certain relevant benefits provided for employees.

18.—(1) Subject to the provisions of this Chapter, where pursuant to a retirement benefits scheme, the employer in any year of assessment pays a sum with a view to the provision of any relevant benefits for any employee of that employer, then (whether or not the accrual of the benefits is dependent on any contingency)—

(a) the sum paid, if not otherwise chargeable to income tax as income of the employee, shall be deemed for all the purposes of the Income Tax Acts to be income of that employee for that year of assessment and assessable to tax under Schedule E, and

(b) where the payment is made under such an insurance or contract as is mentioned in section 143 or 151 of the Income Tax Act, 1967 , relief, if not otherwise allowable, shall be given to that employee under the said section 143 or 151 in respect of the payment to the extent, if any, to which such relief would have been allowable to him if the payment had been made by him and the insurance or contract under which the payment is made had been made with him.

(2) Subject to the provisions of this Chapter, where—

(a) the circumstances in which any relevant benefits under a retirement benefits scheme are to accrue are not such as will render the benefits assessable to income tax as emoluments of the employee in respect of whom the benefits are paid, and

(b) the provision of those benefits is not, or is not fully, secured by the payment of sums by the employer with a view to the provision of those benefits,

then, (whether or not the accrual of the benefits is dependent on any contingency) an amount equal to the cost, estimated in accordance with subsection (3), of securing the provision by a third person of the benefits or, as the case may be, of the benefits so far as not already secured by the payment of such sums as are mentioned in subsection (1), shall be deemed for all purposes of the Income Tax Acts to be income of the employee for the year or years of assessment specified in the said subsection (3) and assessable to income tax under Schedule E.

(3) The cost referred to in subsection (2) shall be estimated either—

(a) as an annual sum payable in each year of assessment in which the scheme in question is in force or the employee is serving, up to and including the year of assessment in which the benefits accrue or there ceases to be any possibility of the accrual thereof, or

(b) as a single sum payable in the year of assessment in which falls the date when the employee acquired the right to the relevant benefits, or the date when he acquired the right to any increase in the relevant benefits,

as may be more appropriate in the circumstances of the case.

(4) Where the employer pays any sum as mentioned in subsection (1) in relation to more than one employee the sum so paid shall, for the purpose of that subsection, be apportioned among those employees by reference to the separate sums which would have had to be paid to secure the separate benefits to be provided for them respectively, and the part of the sum apportioned to each of them shall be deemed for that purpose to have been paid separately in relation to that one of them.

(5) Any reference in this section to the provision for an employee of relevant benefits includes a reference to the provision of benefits payable to that employee's wife or widow, children, dependants or personal representatives.

(6) Section 2 (2) of the Income Tax Act, 1967 , is hereby amended by the insertion, after paragraph (c), of the following paragraph:

“(cc) any payment which is chargeable to tax under Schedule E by virtue of section 18 of the Finance Act, 1972;”.

(7) This section shall come into force—

(a) as respects a scheme which comes into being at a time on or after the 6th day of April, 1974, but before the 6th day of April, 1980, or which comes or came into being before the said 6th day of April, 1974, and is made the subject of an alteration (other than an alteration which, in the opinion of the Revenue Commissioners, is immaterial) at a time after that date but before the said 6th day of April, 1980, at that time, and

(b) as respects any other scheme, on the said 6th day of April, 1980.