Finance Act, 2001

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Amendment of Chapter 5 (policyholders— new basis) of Part 26 of Principal Act.

70.—(1) Chapter 5 of Part 26 of the Principal Act is amended—

(a) in section 730B by the substitution for subsection (2) of the following:

“(2) Subject to subsection (3), this Chapter applies for the purpose of imposing certain charges to tax in respect of a policy (in this Chapter referred to as a ‘life policy’) which is—

(a) a policy of assurance on the life of any person, or

(b) a policy in respect of sinking fund or capital redemption business,

where the life policy is new basis business of the assurance company which commenced the life policy.”,

(b) by the substitution for section 730C of the following:

“Chargeable event.

730C.—(1) Subject to the provisions of this section, in this Chapter—

(a) ‘chargeable event’, in relation to a life policy, means—

(i) the maturity of the life policy (including where payments are made on death or disability, which payments result in the termination of the life policy),

(ii) the surrender in whole or in part of the rights conferred by the life policy (including where payments are made on death or disability, which payments do not result in the termination of the life policy),

(iii) the assignment in whole or in part, of those rights,

and

(b) in the case of a life policy issued by an assurance company which could have made an election under section 730A(2), but did not so do, a chargeable event shall be deemed to happen on 31 December 2000, where the life policy was commenced before that date.

(2) No account shall be taken for the purposes of subsection (1) of an assignment in whole or in part effected—

(a) by way of security for a debt, or the discharge of a debt secured by the rights concerned, where the debt is a debt due to a financial institution (within the meaning of section 906A),

(b) between a husband and wife,

(c) between the spouses or former spouses concerned (as the case may be), by virtue or in consequence of an order made under Part III of the Family Law (Divorce) Act, 1996 , on or following the granting of a decree of divorce,

(d) between the spouses concerned, by virtue or in consequence of an order made under Part II of the Family Law Act, 1995 , on or following the granting of a decree of judicial separation within the meaning of that Act, or

(e) between the spouses or former spouses concerned (as the case may be), by virtue of an order or other determination of like effect, which is analogous to an order referred to in paragraph (c) or (d), of a court under the law of a territory other than the State made under or in consequence of the dissolution of a marriage or the legal separation of the spouses, being a dissolution or legal separation that is entitled to be recognised as valid in the State.

(3) (a) Where at any time a life policy, or an interest therein, gives rise to benefits in respect of death or disability, the amount or value of such benefits which shall be taken into account for the purposes of determining the amount of a gain under section 730D shall be the excess of the value of the policy or, as the case may be, the interest therein, immediately before that time, over the value of the policy or, as the case may be, the interest therein, immediately after that time.

(b) For the purposes of paragraph (a), the value of a policy or of an interest therein at a time means—

(i) in the case of a policy which has a surrender value, the surrender value of the policy or, as the case may be, of the interest therein, at that time, and

(ii) in the case of a policy which does not have a surrender value, the market value of the rights or other benefits conferred by the policy or, as the case may be, the interest therein, at that time.

(c) In determining the amount or value of benefits payable under a life policy for the purposes of paragraph (a) or (b), no account shall be taken of any amount of appropriate tax which may be required by this Chapter to be deducted from such benefits.”,

(i) by the substitution for subsection (2) of the following:

“(2) A gain shall not be treated as arising on the happening of a chargeable event in relation to a life policy where—

(a) immediately before the chargeable event, the assurance company which commenced the life policy—

(i) is in possession of a declaration, in relation to the life policy, of a kind referred in section 630E(2), and

(ii) is not in possession of any information which would reasonably suggest that—

(I) the information contained in that declaration is not, or is no longer, materially correct,

(II) the policyholder (within the meaning of section 730E) failed to comply with the undertaking referred to in section 730E(2)(f), or

(III) immediately before the chargeable event the policyholder (within the said meaning) is resident or ordinarily resident in the State,

(b) immediately before the chargeable event, the policy holder is—

(i) a company carrying on life business,

(ii) an investment undertaking (within the meaning of section 639B), or

(iii) a person who is entitled to exemption from income tax by virtue of section 207(1)(b),

and the assurance company which commenced the life policy is in possession of a declaration in relation to the life policy, of a kind referred to in section 730E(3), or

(c) where the life policy is an asset held in a special savings incentive account within the meaning of section 848B (inserted by the Finance Act, 2001) and the assurance company which commenced the life policy is in possession of a declaration of a kind referred to in section 730E(3A).”,

and

(ii) in subsection (4) by the substitution for paragraph (a) of the following:

“(a) For the purposes of subsection (3), the amount of premiums taken into account in determining a gain on the happening of a chargeable event, is where the gain is, or would but for subsection (2) be determined—

(i) under paragraph (c) of subsection (3), an amount equal to the lesser of B and—

	(P × B)
	V ,

and

(ii) under paragraph (d) of subsection (3), an amount equal to the lesser of A and—

	(P × A)
	V ,

(d) in section 730E—

(i) in subsection (2)—

(I) by the substitution for “section 730D(2)(a)(i)” of “section 730D(2)(a)”,

(II) by the substitution for paragraph (a) of the following:

“(a) is made by the policyholder,”,

and

(III) by the substitution for paragraph (d) of the following:

“(d) declares that the policyholder is not resident and not ordinarily resident in the State at the time of making the declaration,”,

and

(ii) by the substitution for subsection (3) of the following:

“(3) The declaration referred to in section 630D(2)(b) in relation to a life policy is, subject to subsection (4), a declaration in writing to the assurance company which—

(a) is made by the policyholder,

(b) is signed by the policyholder,

(d) contains the name and address of the policyholder,

(e) declares that the policyholder, at the time the declaration is made, is—

(i) a company carrying on life business,

(ii) an investment undertaking (within the meaning of section 739B), or, as the case may be,

(iii) a person who is entitled to exemption from income tax by virtue of section 207(1)(b),

(f) contains an undertaking that should the policyholder cease to be a person referred to in subparagraph (i), (ii), or as the case may be (iii) of paragraph (e), the assurance company will be advised accordingly, and

(g) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this Chapter.

(3A) The declaration referred to in section 630D(2)(c) in relation to a life policy is a declaration in writing to the assurance company which—

(a) is made by a qualifying savings manager (in this paragraph referred to as the ‘declarer’) within the meaning of section 848B (inserted by the Finance Act, 2001), in respect of the life policy which is an asset held in a special savings incentive account,

(b) is signed by the declarer,

(d) declares that, at the time the declaration is made, the life policy in respect of which the declaration is made—

(i) is an asset held in a special savings investment account, and

(ii) is managed by the declarer for the individual who is beneficially entitled to the life policy,

(e) contains the name and the address, and the PPS Number (within the meaning of section 223 of the Social Welfare (Consolidation) Act, 1993 ), of the individual referred to in paragraph (d),

(f) contains an undertaking by the declarer that if the life policy ceases to be an asset held in the special savings incentive account, the declarer will notify the assurance company accordingly, and

(g) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this Chapter.”,

(e) in section 730G(1) in paragraph (c) by the substitution for “Subsections (2) and (4)” by “Subsections (2) to (4)”, and

(f) by the insertion after section 730G of the following:

“Repayment of appropriate tax.

730GA.—For the purposes of a claim to relief, under section 189, 189A or 192, or a repayment of income tax in consequence thereof, the amount of a payment made to a policyholder by an assurance company shall be treated as a net amount of income from the gross amount of which has been deducted income tax, of an amount equal to the amount of appropriate tax (within the meaning of section 730F) deducted from the payment, and such amount of gross income shall be treated as chargeable to tax under Case III of Schedule D.

Capital acquisitions tax: set-off.

730GB.—Where appropriate tax is payable as a result of the death of a person, the amount of such tax, in so far as it has been paid, shall be treated as an amount of capital gains tax paid for the purposes of section 63 of the Finance Act, 1985 .”.

(2) This section shall—

(a) as respects paragraph (b), apply as on and from 15 February 2001,

(b) as respects paragraphs (a), (c), (d), (e) and (f), apply as on and from 1 January 2001.

Finance Act, 2001 Permanent Page URL

Finance Act, 2001

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