Finance Act, 2001

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“Relief for premiums under qualifying long-term care policies.

470A.—(1) In this section—

‘activities of daily living’ means one or more of the following, that is to say, washing, dressing, feeding, toileting, mobility and transferring;

‘appropriate percentage’, in relation to a year of assessment, means a percentage equal to the standard rate of tax for that year;

‘long-term care services’ means necessary diagnostic, preventive, therapeutic, curing, treating, mitigating and rehabilitative services and maintenance or personal care services carried out by or on the advice of a practitioner;

‘maintenance or personal care services’ means any care the primary purpose of which is the provision of needed assistance with any of the disabilities as a result of which an individual is a relevant individual (including protection from threats to health and safety due to severe cognitive impairment);

‘mobility’ means the ability to move indoors from room to room on level surfaces;

‘policy’ means a policy of insurance;

‘PPS Number’, in relation to an individual, means that individual's Personal Public Service Number within the meaning of section 223 of the Social Welfare (Consolidation) Act, 1993 ;

‘practitioner’ means any person who is registered in the register established under section 26 of the Medical Practitioners Act, 1978 , or, in relation to long-term care services provided outside the State, is entitled under the laws of the territory in which such services are provided to practice medicine there;

‘qualifying individual’ in relation to an individual and a qualifying long-term care policy, means—

(a) the individual,

(b) the spouse or a child of the individual, or

(c) a relative of the individual or of the spouse of the individual;

‘qualifying insurer’ means, subject to subsection (2), the holder of—

(i) an authorisation issued by the Minister for Enterprise, Trade and Employment under the European Communities (Life Assurance) Regulations of 1984 ( S.I. No. 57 of 1984 ) as amended, or

(ii) an authorisation granted by the authority charged by law with the duty of supervising the activities of insurance undertakings in a Member State of the European Communities, other than the State, in accordance with Article 6 of Directive No. 79/267/EEC¹ , who is carrying on the business of life assurance in the State, or

(iii) an official authorisation to undertake insurance in Iceland, Liechtenstein and Norway pursuant to the EEA Agreement within the meaning of the European Communities (Amendment) Act, 1993 , and who is carrying on the business of life assurance in the State;

‘qualifying long-term care policy’ means a policy which provides for the discharge or reimbursement of expenses of long-term care services for a relevant individual and which, in accordance with the provisions of this section, is approved of by the Revenue Commissioners for the purposes of this section;

‘relative’, in relation to an individual or the spouse of the individual, includes a relation by marriage and a person in respect of whom the individual is or was the legal guardian;

‘relevant individual’, in relation to a qualifying long-term care policy, means a qualifying individual in relation to that policy in respect of whom a practitioner has certified that the individual is—

(a) unable to perform (without substantial assistance from another individual) at least 2 of the activities of daily living for a period of at least 90 days due to a loss of functional capacity, or

(b) requires substantial supervision to protect such individual from threats to health and safety due to severe cognitive impairment;

‘transferring’ means the ability to move from a bed to an upright chair or a wheelchair and vice versa.

(2) (a) A person shall not be a qualifying insurer until such time as the person has been entered in a register maintained by the Revenue Commissioners for the purposes of this section and any regulations made thereunder.

(b) Where at any time a qualifying insurer—

(i) is not resident in the State, or

(ii) is not carrying on business in the State through a fixed place of business,

the qualifying insurer shall ensure that there is a person resident in the State and appointed by the qualifying insurer to be responsible for the discharge of all the duties and obligations imposed on the qualifying insurer by this section and any regulations made thereunder.

(c) Where a qualifying insurer appoints a person in accordance with paragraph (b), that insurer shall advise the Revenue Commissioners of the identity of that person and the fact of the person's appointment.

(3) (a) The Revenue Commissioners shall not approve a policy for the purposes of this section unless they are satisfied that—

(i) the only benefits provided under the policy are the discharge or reimbursement of expenses of long-term care services in respect of an individual who is a relevant individual in relation to the policy,

(ii) the policy is either not expressed to be terminable by the insurer under the terms of the policy, or is expressed to be so terminable only in special circumstances mentioned in the policy,

(iii) the policy secures that for the purposes of the policy the question of whether an individual is a relevant individual shall be determined by reference to at least 5 activities of daily living,

(iv) subject to paragraph (b), the policy does not provide for—

(I) a lump sum payment on termination,

(II) a cash surrender value, or

(III) any other money,

that can be paid or assigned to any person, borrowed, or pledged as collateral for a loan, and

(v) the policy is not connected with any other policy.

(b) A policy shall not fail to meet the requirements of paragraph (a)(iv) merely because it provides for the payment of periodic amounts of money without regard to the expenses incurred on the services provided during the period to which the payments relate.

(c) A policy is connected with another policy, whether held by the same person or another person, if—

(i) either policy was issued in respect of an assurance made with reference to the other, or with a view to enabling the other to be made on particular terms, or with a view to facilitating the making of the other on particular terms, and

(ii) the terms on which either policy was issued would have been different if the other policy had not been issued.

(4) (a) A long-term care policy shall be a qualifying long-term care policy within the meaning of this section if it conforms with a form which at the time it is issued is either—

(i) a standard form approved by the Revenue Commissioners as a standard form of qualifying long-term care policy, or

(ii) a form varying from a standard form so approved in no other respects than by making such alterations to that standard form as are, at the time the policy is issued, approved by the Revenue Commissioners as being compatible with a qualifying long-term care policy when made to that standard form and satisfying any conditions subject to which the alterations are so approved.

(b) In approving a policy, or a standard form of a policy, as a qualifying long-term care policy for the purposes of this section, the Revenue Commissioners may disregard any provision of the policy which appears to them insignificant.

(5) Where, for any year of assessment, an individual, who is resident in the State, makes a payment to a qualifying insurer in respect of a premium under a qualifying long-term care policy, the beneficiary of which is a qualifying individual in relation to the individual, the individual making the payment shall, subject to the condition specified in subsection (6), be entitled to relief under this section in accordance with subsection (8).

(6) The condition specified in this subsection is that, at the time the long-term care policy is entered into, the individual (in this subsection referred to as the ‘declarer’) furnishes to the qualifying insurer a declaration in writing which—

(a) is made and signed by the declarer,

(b) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(c) contains the declarer's full name, the address of his or her permanent residence and his or her PPS Number,

(d) declares that—

(i) at the time the declaration is made that he or she is resident in the State, and

(ii) the beneficiary under the policy is a qualifying individual in relation to the declarer,

and

(e) contains an undertaking that if, at any time while the long-term care policy is in force, the declarer ceases to be resident in the State he or she will notify the qualifying insurer accordingly.

(7) (a) A qualifying insurer shall—

(i) keep and retain for the longer of the following periods—

(I) a period of 6 years, and

(II) a period which, in relation to the long-term care policy in respect of which the declaration is made, ends not later than 3 years after the date on which premiums have ceased to be paid or payable in respect of the policy.

all declarations of the kind mentioned in subsection (6) which have been made in respect of qualifying long-term care policies issued by the qualifying insurer, and

(ii) on being so required by notice given to that insurer in writing by an inspector, make available within the State to the inspector, within the time specified in the notice, all or any of the declarations of the kind mentioned in subsection (6).

(b) The inspector may examine or take extracts from or copies of any declarations made available to him or her under paragraph (a).

(8) (a) Where an individual makes a payment to a qualifying insurer in respect of which he or she is entitled to relief under this section, the individual shall be entitled to deduct and retain out of the payment an amount equal to the appropriate percentage for the year of assessment in which payment of the premium falls due.

(b) The qualifying insurer to whom a payment referred to in paragraph (a) is made—

(i) shall accept the amount paid after deduction in discharge of the individual's liability to the same extent as if the deduction had not been made, and

(ii) may, on making a claim in accordance with regulations, recover from the Revenue Commissioners an amount equal to the amount deducted.

(9) (a) The Revenue Commissioners shall make regulations providing generally as to administration of this section and those regulations may, in particular and without prejudice to the generality of the foregoing, include provision—

(i) for the registration of persons as qualifying insurers for the purposes of this section and those regulations,

(ii) that a claim under subsection (8)(b)(ii) by a qualifying insurer shall—

(I) be made in such form and manner,

(II) be made at such time, and

(III) be accompanied by such documents,

as provided for in the regulations,

(iii) for the making of annual information returns by qualifying insurers, in such form (including electronic form) and manner as may be prescribed, and containing specified details in relation to—

(I) each individual making payments to such insurers under qualifying long-term care policies in a year of assessment,

(II) the total amount of premiums paid under a qualifying long-term care policy by that individual in the year of assessment, and

(III) the total amount deducted by that individual under subsection (8)(a),

and

(iv) for the furnishing of information to the Revenue Commissioners for the purposes of the regulations.

(b) Every regulation made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annualling the regulation is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

(10) (a) Where any amount is paid to a qualifying insurer by the Revenue Commissioners as an amount recoverable by virtue of subsection (8)(b)(ii) but is an amount to which that qualifying insurer is not entitled, that amount shall be repaid by the qualifying insurer.

(b) There shall be made such assessments, adjustments or set-offs as may be required for securing repayment of the amount referred to in paragraph (a) and the provisions of this Act relating to the assessment, collection and recovery of income tax shall, in so far as they are applicable and with necessary modification, apply in relation to the recovery of such amount.

(11) Where relief is given under this section in respect of a payment, relief shall not be given under any other provision of the Income Tax Acts in respect of that payment.

(12) The Revenue Commissioners may nominate any of their officers, including an inspector, to perform any acts and discharge any functions authorised by this section, other than those specified in subsection (9), to be performed or discharged by them.”,