Income Tax Act, 1967.

Allowance of contributions as deductions, etc.

233.—(1) Where, under the terms of a retirement benefits scheme approved by the Revenue Commissioners under section 229, a director or employee contributes towards the cost of providing the benefits afforded by the scheme, any amount so contributed by the director or employee shall, for the purpose of assessment under Schedule E, be allowed as a deduction from the remuneration from his office or employment and such deduction shall be made in accordance with section 112, but

(a) the amount (hereafter in this paragraph referred to as the said amount), otherwise allowable under this subsection for any year of assessment, of any deduction or deductions shall, where necessary, be reduced (including reduced to nil) so that the total amount of the said amount and of the deduction, if any, allowable for the same year of assessment under section 222 (1) in respect of contributions made to a superannuation fund relating to the same office or employment, shall not exceed 15 per cent. of the remuneration from the office or employment concerned for the year, or the portion of a year, for which the relevant contributions were made, and

(b) no deduction shall be allowable in respect of a contribution which is repaid before the end of the year of assessment in which it is made.

(2) Where any contributions made by a director or employee under an approved scheme within the meaning of subsection (1) are repaid to him during his lifetime—

(a) section 434 shall apply to the amount of the contributions repaid as if it were a payment of interest charged to tax under Schedule D not payable out of profits or gains brought into charge to tax, and tax shall accordingly be deducted by and recovered from the person by or through whom the repayment is made,

(b) for the purposes of income tax (excluding sur-tax) the amount of the contributions repaid shall not be regarded as income of the director or employee but, on making a claim in that behalf, he shall be entitled to be repaid so much of the tax deducted under paragraph (a) as is in excess of a sum equal to tax on the amount of the contributions repaid, exclusive of any contributions or portions of contributions which were not allowable as deductions under subsection (1), at a rate ascertained by dividing the total of the additional amounts of income tax which would have been payable by him for the six years of assessment preceding that in which the contributions were repaid if no deduction had been allowed under subsection (1) by reference to the payment of those contributions, by the total of the deductions which were actually so allowed for those years, and

(c) for the purposes of sur-tax, the contributions repaid shall, to the extent to which they were allowed as deductions under subsection (1), be treated as income of the several years of assessment for which they were so allowed and any necessary additional assessments to sur-tax may be made accordingly.