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6 1967

INCOME TAX ACT, 1967

Chapter III

Retirement Annuities

Retirement annuities (relief for premiums).

235. —(1) Where an individual—

(a) is (or would but for an insufficiency of profits or gains be) chargeable to tax in respect of relevant earnings from any trade, profession, office or employment carried on or held by him, and

(b) pays a premium or other consideration under an annuity contract for the time being approved by the Revenue Commissioners as being a contract the main benefit secured by which is a life annuity for the individual in his old age (hereafter in this Chapter referred to as a qualifying premium),

relief from tax may be given in respect of the qualifying premium under section 236.

(2) Subject to subsection (3), the Revenue Commissioners shall not approve a contract unless it appears to them to satisfy the conditions that it is made by the individual with a person lawfully carrying on in the State the business of granting annuities on human life, and that it does not—

(a) provide for the payment by that person during the life of the individual of any sum except sums payable by way of annuity to the individual,

(b) provide for the annuity payable to the individual to commence before he attains the age of sixty or after he attains the age of seventy,

(c) provide for the payment by that person of any other sums except sums payable by way of annuity to the individual's widow or widower and any sums which, in the event of no annuity becoming payable either to the individual or to a widow or widower, are payable to the individual's personal representatives by way of return of premiums, by way of reasonable interest on premiums or by way of bonuses out of profits,

(d) provide for the annuity, if any, payable to a widow or widower of the individual to be of a greater annual amount than that paid or payable to the individual, or

(e) provide for the payment of any annuity otherwise than for the life of the annuitant,

and that it does include provision securing that no annuity payable under it shall be capable in whole or in part of surrender, commutation or assignment.

(3) The Revenue Commissioners may, if they think fit, and subject to any conditions they think proper to impose, approve a contract otherwise satisfying the foregoing conditions, notwithstanding that the contract provides for one or more of the following matters:

(a) for the payment after the individual's death of an annuity to a dependant not the widow or widower of the individual;

(b) for the payment to the individual of an annuity commencing before he attains the age of sixty, if the annuity is payable on his becoming permanently incapable through infirmity of mind or body of carrying on his own occupation or any occupation of a similar nature for which he is trained or fitted;

(c) if the individual's occupation is one in which persons customarily retire before attaining the age of sixty, for the annuity to commence before he attains that age (but not before he attains the age of fifty);

(d) for the annuity payable to any person to continue for a term certain (not exceeding ten years) notwithstanding his death within that term, or for the annuity payable to any person to terminate, or be suspended, on marriage (or remarriage) or in other circumstances;

(e) in the case of an annuity which is to continue for a term certain, for the annuity to be assignable by will, and in the event of any person dying entitled to it, for it to be assignable by his personal representatives in the distribution of the estate so as to give effect to a testamentary disposition, or to the rights of those entitled on intestacy or to an appropriation of it to a legacy or to a share or interest in the estate.

(4) The foregoing provisions of this section shall apply in relation to a contribution under a trust scheme approved by the Revenue Commissioners as they apply in relation to a premium under an annuity contract so approved, with the modification that, for the condition as to the person with whom the contract is made, there shall be substituted a condition that the scheme—

(a) is established under the law of, and administered in, the State,

(b) is established for the benefit of individuals engaged in or connected with a particular occupation (or one or other of a group of occupations), and for the purpose of providing retirement annuities for them, with or without subsidiary benefits for their families or dependants, and

(c) is so established under irrevocable trusts by a body of persons comprising or representing the majority of the individuals so engaged in the State,

and with the necessary adaptations of other references to the contract or the person with whom it is made; and exemption from income tax shall be allowed in respect of income derived from investments or deposits of any fund maintained for the purpose aforesaid under a scheme for the time being approved under this subsection.

(5) The Revenue Commissioners may at any time, by notice in writing given to the persons by and to whom premiums are payable under any contract for the time being approved under this section or to the trustees or other persons having the management of any scheme so approved, withdraw that approval on such grounds and from such date (including a date before the date of the notice) as may be specified in the notice and where any approval is withdrawn under this section, such assessments as may be appropriate for the purpose of withdrawing any reliefs given under this Chapter consequent upon the approval shall thereupon be made.

(6) For the purposes of this Chapter a married woman's relevant earnings shall not be treated as her husband's relevant earnings, notwithstanding that her income chargeable to tax is treated as his income.

(7) Subject to subsection (6), “relevant earnings” in relation to any individual means, for the purposes of this Chapter, any income of his chargeable to tax for the year of assessment in question, being either—

(a) income arising in respect of remuneration from an office or employment of profit held by him other than a pensionable office or employment,

(b) income from any property which is attached to or forms part of the emoluments of any such office or employment of profit held by him,

(c) income which is chargeable under Schedule B or Schedule D and is immediately derived by him from the carrying on or exercise by him of his trade or profession either as an individual or, in the case of a partnership, as a partner personally acting therein, or

(d) income treated as earned income by virtue of section 2 (2) (c),

but does not include any remuneration from an investment company of which he is—

(i) a proprietary director as defined in section 226, or

(ii) a proprietary employee as defined in that section

In this subsection “investment company” means a company the income whereof consists mainly of investment income, and “investment income” means, in relation to a company, income which, if the company were an individual, would not be earned income.

(8) For the purposes of this Chapter, an office or employment is a pensionable office or employment if, and only if, service in it is service to which a sponsored superannuation scheme relates (not being a scheme under which the benefits provided in respect of that service are limited to a lump sum payable on the termination of the service through death before the age of seventy or some lower age or disability before the age of seventy or some lower age); but references to a pensionable office or employment apply whether or not the duties are performed wholly or partly in the State or the holder is chargeable to tax in respect of it.

Service in an office or employment shall not for the purposes of this definition be treated as service to which a sponsored superannuation scheme relates by reason only of the fact that the holder of the office or employment might (though he does not) participate in the scheme by exercising or refraining from exercising an option open to him by virtue of that service.

(9) In subsection (8) and in Schedule 5 “sponsored superannuation scheme” means a scheme or arrangement relating to service in particular offices or employments and having for its object or one of its objects to make provision in respect of persons serving therein against future retirement or partial retirement, against future termination of service through death or disability, or against similar matters, being a scheme or arrangement under which any part of the cost of the provision so made is or has been borne otherwise than by those persons by reason of their service (whether it is the cost or part of the cost of the benefits provided, or of paying premiums or other sums in order to provide those benefits, or of administering or instituting the scheme or arrangement); but for this purpose a person shall be treated as bearing by reason of his service the cost of any payment made or agreed to be made in respect of his service, if that payment or the agreement to make it is treated under this Act as increasing his income or would be so treated if he were chargeable to tax under Schedule E in respect of his emoluments from that service.

(10) Nothing in sections 4 and 6 of the Policies of Assurance Act, 1867, shall be taken to apply to any contract approved under this section.

Nature and amount of relief for qualifying premiums.

236. —(1) Where relief is to be given under this section in respect of any qualifying premium paid by an individual, the amount of that premium shall be deducted from or set off against his relevant earnings for the year of assessment in which the premium is paid:

Provided that the amount which may be deducted or set off in any year of assessment (whether in respect of one or more qualifying premiums) shall not be more than the sum of £500, nor more than one-tenth of his net relevant earnings for that year, and where the condition in section 235 (1) (a) is satisfied as respects part only of that year, then, for the said sum of £500, there shall be substituted the sum which bears to it the same proportion as that part bears to the whole year (but so that in the case of individuals holding a pensionable office or employment, and of individuals born in or before the year 1917, this proviso shall have effect subject to the provisions of Schedule 5).

(2) If in any year of assessment a reduction or a greater reduction would be made under this section in the relevant earnings of an individual but for an insufficiency of net relevant earnings, the amount of the reduction which would be made but for that insufficiency, less the amount of any reduction which is made in that year, shall be carried foward to the next following year, and shall be treated for the purposes of relief under this section as the amount of a qualifying premium paid in that following year, and so on for succeeding years (if necessary).

(3) For the purposes of relief under this section, an individual's relevant earnings are those earnings before giving effect to any deduction falling to be made therefrom in respect of a loss or in respect of any allowance under section 241, 244 (3) or 245, Chapter III of Part XIV, Part XV or XVI, and references to income in the following provisions of this section (other than references to total income) shall be construed similarly.

(4) Subject to the following provisions of this section, “net relevant earnings” means, in relation to any individual, the amount of his relevant earnings for the year of assessment in question, less the amount of any deductions falling to be made from the relevant earnings in computing his total income for that year being either—

(a) deductions in respect of payments made by him, or

(b) deductions in respect of losses or of such allowances as are mentioned in subsection (3), being losses or allowances arising from activities, profits or gains of which would be included in computing relevant earnings of the individual or of the individual's wife or husband for the year 1958-59 or a later year of assessment.

(5) Where, in any year of assessment for which an individual claims and is allowed relief under this section, there falls to be made in computing the total income of the individual or that of the individual's wife or husband a deduction in respect of any such loss or allowance of the individual as is referred to in subsection (4) (b), and the deduction or part of it falls to be so made from income other than relevant earnings, the amount of the deduction made from that other income shall be treated as reducing the individual's net relevant earnings for subsequent years of assessment (being deducted as far as may be from those of the immediately following year, whether or not he claims or is entitled to claim relief under this section for that year, and so far as it cannot be so deducted, then from those of the next year, and so on).

(6) Where an individual's income for any year of assessment consists partly of relevant earnings, and partly of other income, then, as far as may be, any deductions which fall to be made in computing his total income, and which may be treated in whole or in part either as made from relevant earnings or as made from other income, shall be treated for the purposes of this section as being made from those relevant earnings in so far as they are deductions in respect of any such loss as is referred to in subsection (4) (b) and otherwise as being made from that other income.

(7) An individual's net relevant earnings for any year of assessment are to be computed without regard to any relief which falls to be given for that year under this section either to the individual or to the individual's wife or husband.

(8) Where relief under this section for any year of assessment is claimed and allowed (whether or not relief then falls to be given for that year), and afterwards there is made any additional assessment, alteration of an assessment, or other adjustment of the claimant's liability to tax, there shall be made also such adjustments, if any, as are consequential thereon in the relief allowed or given under this section for that or any subsequent year of assessment.

(9) Where relief under this section is claimed and allowed for any year of assessment in respect of any payment, relief shall not be given in respect of it under any other provision of this Act for the same or a later year of assessment nor (in the case of a payment under an annuity contract) in respect of any other premium or consideration for an annuity under the same contract; and references in this Act to relief in respect of life assurance premiums shall not be taken to include relief under this section.

(10) In this section “total income” means total income from all sources as estimated in accordance with the provisions of this Act.

Taxation of assurance companies doing annuity business.

237. —(1) Where an assurance company carries on pension annuity business—

(a) exemption from income tax shall be allowed in respect of income from investments and deposits of so much of the company's annuity fund as is referable to that business, and

(b) the company shall not be entitled to treat as paid out of profits or gains brought into charge to tax any part so referable of the annuities paid by the company.

(2) Except in the case of an assurance company charged to tax in accordance with the provisions applicable to Case I of Schedule D in respect of the profits of its life assurance business or in respect of (where the company has made an election under section 217 (3)) the profits of its ordinary life assurance business, profits arising to an assurance company from pension annuity business, or from general annuity business, shall be treated as annual profits or gains within Schedule D, and be chargeable under Case IV of that Schedule, and for that purpose—

(a) the business of each such class shall be treated separately, and

(b) subject to the foregoing paragraph, the profits therefrom shall be computed in accordance with the provisions applicable to Case I of Schedule D (and without regard to the provisions of section 79 (2) as to the period to be taken in computing profits for the purposes of Case IV of Schedule D):

Provided that in making any such computation—

(i) the provisions of section 217 (1) shall apply with the necessary modifications and, in particular, with the omission therefrom of all references to policy-holders,

(ii) no deduction shall be allowed in respect of any expense being an expense of management referred to in section 214, and

(iii) there may be set off against the profits any loss, to be computed on the same basis as the profits, which has been sustained in annuity business of the same class in any previous year not being a year prior to the year 1958-59; but no such loss shall be taken into account more than once for the purposes of this paragraph.

(3) Where income from the investments of the foreign life assurance fund of an assurance company having its head office in the State has been relieved from tax under section 76 (3), a corresponding reduction shall be made in any amount on which the company is chargeable to tax by virtue of subsection (2) in like manner as a corresponding reduction is made under section 214 (5) in the relief granted to the company in respect of expenses of management.

(4) Where an assurance company not having its head office in the State carries on life assurance business through any branch or agency in the State, then, any charge to tax under subsection (2) for any year of assessment on the profits arising to the company from pension annuity business, or from general annuity business,—

(a) shall be made on an amount bearing to the total amount of those profits, wherever arising, the same proportion as, under section 215, the part of the income of the company's life assurance fund charged to tax under Case III of Schedule D bears in that year to the total amount of that income, and

(b) shall not be treated as a charge to tax in respect of life assurance business for the purposes of section 215 (3).

(5) The exemption from tax conferred by subsection (1) shall not exclude any sums from being taken into account as receipts in computing profits or gains or losses for any purpose of this Act; and an assurance company shall not, by virtue of subsection (2), be entitled to any relief under section 310 in respect of losses on its pension annuity business or on its general annuity business.

(6) For the purposes of this section “general annuity business” means any annuity business which is not pension annuity business, and any division to be made between the two classes of business shall be made on the principle of referring to pension annuity business any premiums falling within subsection (7), together with the part resulting therefrom of the company's annuity fund and liability for annuities, and of dealing with other incomings and outgoings accordingly.

(7) The premiums to be referred to pension annuity business are those payable under contracts falling (at the time when the premium is payable) within one or other of the following descriptions:

(a) any contract with an individual who is, or would but for an insufficiency of profits or gains be, chargeable to tax in respect of relevant earnings (as defined in section 235) from a trade, profession, office or employment carried on or held by him, being a contract approved by the Revenue Commissioners under that section; and

(b) any contract with the trustees or other persons having the management of a superannuation fund within the meaning of section 222 or of a scheme approved under section 235, being a contract which—

(i) was entered into for the purposes only of that fund or scheme or, in the case of a fund part only of which is approved under section 222, then for the purposes only of that part of that fund, and

(ii) (in the case of a contract entered into or varied on or after the 6th day of April, 1958) is so framed that the liabilities undertaken by the assurance company under the contract correspond with liabilities against which the contract is intended to secure the fund (or the relevant part of it) or scheme.

(8) This section shall be construed in accordance with section 1; and for the purposes of this section “annuity business” means the business of granting annuities on human life and “premium” includes any consideration for an annuity.

Supplementary provisions.

238. —(1) Relief shall not be given under section 236 in respect of a qualifying premium except on a claim made to and allowed by the inspector, but any person aggrieved by any decision of the inspector on any such claim may, on giving notice in writing to the inspector within twenty-one days after the notification to him of the decision, appeal to the Special Commissioners.

(2) The Special Commissioners shall hear and determine an appeal to them under subsection (1) as if it were an appeal to them against an assessment to income tax and the provisions of this Act relating to the rehearing of an appeal or the statement of a case for the opinion of the High Court on a point of law, shall, with the necessary modifications, apply accordingly.

(3) The Revenue Commissioners may make regulations prescribing the procedure to be adopted in giving effect to this Chapter in so far as such procedure is not otherwise provided for and, without prejudice to the generality of the foregoing provision, may by such regulations—

(a) prescribe the manner and form in which claims for relief from or repayment of tax are to be made,

(b) prescribe the time limit for the making of any such claim as aforesaid,

(c) require the trustees or other persons having the management of an approved trust scheme to deliver from time to time such information and particulars as the Revenue Commissioners may reasonably require for the purposes of this Chapter, and

(d) apply for purposes of this Chapter or of the regulations any provision of this Act (with or without modifications).

(4) If any person, for the purpose of obtaining for himself or any other person any relief from or repayment of tax under this Chapter, knowingly makes any false statement or false representation, he shall be liable to a penalty of £500.