Corporation Tax Act, 1976

Investment income reserved for policy holders.

36.—(1) A claim may be made under this section by an assurance company carrying on life business in respect of unrelieved income from investments held in connection with that business.

(2) If on the claim the company proves that it has, for any financial year for which the rate of corporation tax exceeds the standard rate of income tax for the year of assessment in which that year ends, borne corporation tax in respect of any of the said unrelieved income, the company shall be entitled to repayment of so much of that tax borne by it for that year as is equal to the amount by which—

(a) the corporation tax borne by the company for that year in respect of the part specified in subsection (5) of the said unrelieved income,

exceeds—

(b) the corporation tax which would have been so borne in respect of that part of that income if the rate of corporation tax for that year had been equal to the standard rate of income tax for the said year of assessment.

(3) For the purposes of this section and section 37—

(a) “unrelieved income” means income which has not been excluded from charge to tax by virtue of any provision and against which no relief has been allowed by deduction or set-off;

(b) the amount of tax which has been or would be borne by a company shall be taken to be the amount of tax which has been or would be so borne after allowance of any relief to which the company is or would be entitled otherwise than under the provisions of this section.

(4) The franked investment income from investments held in connection with a company's life business shall be apportioned between policy holders or annuitants and shareholders by attributing to policy holders or annuitants such fraction of the said income as the fraction of the profits of the company's life business which, on a computation of such profits in accordance with the provisions applicable to Case I of Schedule D (whether or not the company is in fact charged to tax under that Case for the relevant accounting period or periods) would be excluded under section 35 (1) (a) (b):

Provided that, if the franked investment income exceeds the profits as computed in accordance with those provisions other than section 35, the part attributable to policy holders or annuitants shall be that fraction of the income so far as not exceeding the profits, together with the amount of the excess.

(5) (a) Where the aggregate of the said unrelieved income and the shareholders' part of the franked investment income exceeds the profits of the company in respect of its life business for the relevant accounting periods computed in accordance with the provisions of Case I of Schedule D as extended by sections 35 and 38 (whether or not the company is charged to tax under that Case) the said part shall be the amount of that excess or the unrelieved income whichever is the less, and

(b) where the said aggregate is less than the profits of the company's life business as so computed the provisions of subsection (2) shall not apply.