Finance Act 2005

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

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

(a) in section 730C(1)(a) by inserting the following after subparagraph (iii):

“(iv) the ending of a relevant period, where such ending is not otherwise a chargeable event within the meaning of this section, and for the purposes of this subparagraph ‘relevant period’ in relation to a life policy means a period of 7 years beginning with the inception of the policy and each subsequent period of 7 years beginning immediately after the preceding relevant period,”,

(b) in section 730D—

(i) in subsection (1)—

(I) by deleting “and” in paragraph (d), and

(II) by inserting the following after paragraph (d):

“(da) if the chargeable event is the ending of a relevant period in accordance with section 730C(1)(a)(iv), a gain in the amount determined under subsection (3)(da), and”,

(ii) in subsection (3)—

(I) by deleting “and” in paragraph (d), and

(II) by inserting the following after paragraph (d):

“(da) in subsection (1)(da) is the amount determined by the formula—

V — P

and”,

(iii) in subsection (4) by inserting the following after paragraph (b):

“(ba) Where a chargeable event in relation to a life policy is the ending of a relevant period in accordance with section 730C(1)(a)(iv) then, for the purposes of determining a gain arising on the happening of a subsequent chargeable event, the allowable premiums immediately after the time of such ending shall be deemed to be the greater of—

(i) an amount equal to the value of the policy immediately after the time of such ending, and

(ii) the allowable premiums immediately before such ending.”,

and

(iv) by inserting the following after subsection (4)—

“(5) (a) Where at any time—

(i) a chargeable event, being a chargeable event (in this subsection referred to as a ‘relevant event’) within the meaning of section 730C(1)(a)(iv), occurs in relation to a life policy which commenced before 1 May 2005,

(ii) immediately before that time the assurance company that commenced the life policy does not have in its possession a declaration in relation to the policy of the kind referred to in subsection (2), and

(iii) the permanent address of the policyholder, as stated in the policy, is not in the State and the assurance company does not have reasonable grounds to believe that the policyholder is resident in the State,

then the assurance company may elect to be treated in relation to that chargeable event for the purposes of subsection (2) as if, immediately before that time, the assurance company was in possession of a declaration in relation to the policy of the kind referred to in that subsection.

(b) Where at any time—

(i) a relevant event occurred in relation to a life policy and a chargeable event, not being a relevant event, subsequently occurs in relation to the policy,

(ii) this subsection applied to the relevant event in accordance with paragraph (a), and

(iii) immediately before that time the assurance company that commenced the life policy does not have in its possession a declaration in relation to the policy of the kind referred to in subsection (2),

then paragraph (a) shall be deemed not to have applied to the relevant event and any appropriate tax payable by virtue of a gain arising under this section shall be due and payable as if paragraph (a) had not been enacted.”,

(c) in section 730E(2)(a) by adding “at or about the time of the inception of the life policy” after “policyholder”, and

(d) in section 730F(3)(a)(ii) by inserting the following after clause (I):

“(Ia) is the ending of a relevant period in accordance with section 730C(1)(a)(iv), or”.

(2) This section comes into operation on such day or days as the Minister for Finance may by order appoint either generally or with reference to any particular provision of this section or class of policy and different days may be so appointed for different provisions of this section or for different classes of policies.