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7 1988

SOCIAL WELFARE ACT, 1988

PART III

Social Insurance for the Self-Employed

Amendment of section 2 of Principal Act (interpretation generally).

10. —Section 2 (1) of the Principal Act is hereby amended—

(a) by the deletion of the definition of “qualifying contribution”, and

(b) by the insertion of the following definitions:

“‘insurable self-employment’ means self-employment of such a nature that a person engaged therein would be a self-employed contributor;

qualifying contribution’ means the appropriate employment contribution or self-employment contribution which was paid or would have been paid but for section 10 (1) (c) or section 17C (d) or (e) in respect of any insured person;

reckonable emoluments’, in relation to a self-employed contributor, means emoluments (other than reckonable earnings, non-pecuniary emoluments and such other emoluments as may be prescribed) to which Chapter IV of Part V of the Income Tax Act, 1967 , applies, reduced by so much of the allowable contribution referred to in regulations 59 and 60 of the Income Tax (Employments) Regulations, 1960 (S.I. No. 28 of 1960) (inserted by the Income Tax (Employments) Regulations, 1972 (S.I. No. 260 of 1972)) as is deducted on payment of those emoluments;

reckonable income’, in relation to a self-employed contributor, means the aggregate income (excluding reckonable earnings, reckonable emoluments, non-pecuniary income and such other income as may be prescribed), from all sources for the contribution year as estimated in accordance with the provisions of the Income Tax Acts, but without regard to section 2 or section 18 of the Finance Act, 1969 , or (save in the case of a person to whom paragraph 1 of Part IIA of the First Schedule applies) to Chapter 1 (inserted by the Finance Act, 1980 ) of Part IX of the Income Tax Act, 1967 , after deducting from the income so much of any deduction allowed by virtue of the provisions referred to in section 33 of the Finance Act, 1975 , as is to be deducted from or set off against that income in charging it to income tax;

self-employed contributor’ has the meaning assigned in section 17A;

self-employment contribution’ has the meaning assigned in section 17B.”.

Insertion of Chapter 1A in Part II of Principal Act.

11. —The Principal Act is hereby amended by the insertion in Part II after Chapter 1 of the following Chapter:

“Chapter 1A

INSURED PERSONS, SELF-EMPLOYMENT CONTRIBUTIONS

Self-employed contributors.

17A.—(1) Subject to this Act—

(a) every person who, being over the age of 16 years and under pensionable age (not being a person included in any of the classes of person specified in Part IIA of the First Schedule) who has reckonable income or reckonable emoluments shall be a self-employed contributor for the purposes of this Act, regardless of whether he is also an employed contributor,

(b) every person becoming for the first time either an employed contributor or a self-employed contributor shall there-by become insured under this Act and shall thereafter continue throughout his life to be so insured, and

(c) in the case of a person who, not having been an employed contributor at any time, becomes for the first time a self-employed contributor the first day of the contribution year in which he becomes a self-employed contributor shall be regarded as the date of entry into insurance.

(2) Subject to this Act, where a person ceases to be a self-employed contributor otherwise than by reason of attaining pensionable age and has qualifying contributions in respect of not less than 156 contribution weeks, he shall, on making application in the prescribed manner and within the prescribed period, be entitled to become an insured person paying contributions under this Act voluntarily (in this Act referred to as a voluntary contributor).

(3) A voluntary contributor shall if he becomes a self-employed contributor cease to be a voluntary contributor.

(4) Regulations may provide for—

(a) including among self-employed contributors classes of person or part of any such class of person specified in or included in Part IIA of the First Schedule,

(b) adding to the classes of person specified in Part IIA of the First Schedule,

(c) the modification of any of the provisions of this Act relating to self-employed contributors.

(5) Where regulations are proposed to be made for the purposes of subsection (4), a draft thereof shall be laid before each House of the Oireachtas and the regulations shall not be made until a resolution approving of the draft has been passed by each such House.

(6) Subsection (1) shall come into operation on 6th April, 1988.

Payment of contributions into Social Insurance Fund.

17B.—(1) For the purposes of section 9 there shall, in addition to the contributions provided for by that section, be contributions (in this Act referred to as self-employment contributions) in respect of self-employed contributors.

(2) Self-employment contributions shall be paid into the Social Insurance Fund.

Rates of self-employment contributions and related matters.

17C.—Self-employment contributions shall be paid by self-employed contributors in accordance with the following provisions:

(a) Subject to paragraphs (b), (d) and (k), where in any contribution year a self-employed contributor has reckonable income there shall be payable by him a self-employment contribution which shall—

(i) with effect from 6th April, 1988, be of an amount equal to 3 per cent. of the reckonable income or the amount of £208, whichever is the greater,

(ii) with effect from 6th April, 1989, be of an amount equal to 4 per cent. of the reckonable income or the amount of £208, whichever is the greater, and

(iii) with effect from 6th April, 1990, be of an amount equal to 5 per cent. of the reckonable income or the amount of £208, whichever is the greater.

(b) Where for any contribution year a self-employed contributor is informed by the Revenue Commissioners that he is not required to make a return of income within the meaning of section 48 (1) of the Finance Act, 1986 , self-employment contributions shall be paid by the self-employed contributor (whether by instalments or otherwise as may be prescribed) amounting to £104 in respect of that contribution year.

(c) Subject to paragraphs (d) and (k), where in any contribution year a payment is made to a self-employed contributor in respect of reckonable emoluments of that self-employed contributor, there shall be payable by him a self-employment contribution which shall—

(i) with effect from 6th April, 1988, be of an amount equal to 3 per cent. of the reckonable emoluments or the amount of £208, whichever is the greater,

(ii) with effect from 6th April, 1989, be of an amount equal to 4 per cent. of reckonable emoluments or the amount of £208, whichever is the greater, and

(iii) with effect from 6th April, 1990, be of an amount equal to 5 per cent. of reckonable emoluments or the amount of £208, whichever is the greater.

(d) Contributions under paragraph (a) or (c) shall not be payable in any contribution year on so much (if any) of the reckonable income or reckonable emoluments for that year of a self-employed contributor as is in excess of £16,200.

(e) The self-employment contribution payable by a self-employed contributor in accordance with paragraph (a), (b) or (c), whichever is appropriate, shall not be payable in the case of a self-employed contributor who is in receipt of any of the following:

(i) a widow's (contributory) pension;

(ii) a widow's (non-contributory) pension;

(iii) deserted wife's benefit;

(iv) deserted wife's allowance;

(v) death benefit by way of widow's pension under section 50;

(vi) a social assistance allowance under section 197; or

(vii) a payment corresponding to a pension referred to in subparagraph (i) or (v) from the competent authority of a Member State (other than the State) of the European Communities under legislation to which the regulations of the Communities on the application of social security schemes to employed persons and their families moving within the territory of the European Communities apply.

(f) During the period of three months beginning on 1st October, 1990, the Minister shall, in consultation with the Minister for Finance, review the provisions of this Chapter and of Chapters 7 and 11 insofar as they relate to self-employed contributors.

(g) Subject to regulations under section 17D, where a self-employment contribution has been paid by a self-employed contributor of not less than the amount that he is liable to pay under paragraph (a) or the amount specified in paragraph (b), whichever is appropriate, he shall be regarded as having paid contributions for each contribution week in that contribution year and, where the contribution paid is less than the appropriate amount aforesaid no contribution shall be regarded as having been paid by the self-employed contributor in respect of any week of that contribution year.

(h) The Minister may by regulations vary the sum specified in paragraph (d) and such variation shall take effect from the beginning of the contribution year following that in which the regulations are made.

(i) Where regulations under paragraph (h) are proposed to be made, a draft of the proposed regulations shall be laid before each House of the Oireachtas and the regulations shall not be made until a resolution approving of the draft has been passed by each such House.

(j) Subject to subsection (3) of section 17G, self-employment contributions shall be disregarded in determining whether the contribution conditions for any benefit other than old age (contributory) pension, widow's (contributory) pension or orphan's (contributory) allowance are satisfied.

(k) A person who but for this paragraph would be liable for contributions of £208 under both paragraph (a) and paragraph (c) shall be liable only for a single contribution of £208.

Regulations providing for determination of contributions payable.

17D.—(1) Subject to subsection (2), regulations may provide for the determination of the contributions payable, the amount or rates of such contributions, and the contribution weeks in respect of which such contributions shall be regarded as having been paid, in the case of a person who—

(a) becomes for the first time a self-employed contributor,

(b) ceases to be a self-employed contributor,

(c) is both an employed contributor and a self-employed contributor whether concurrently or not,

(d) in any contribution year has reckonable emoluments but does not have reckonable income,

(e) in any contribution year has both reckonable emoluments and reckonable income,

(f) in any contribution year has reckonable emoluments which relate to a period less than the full year, or

(g) in respect of the contribution year ended 5th April, 1989, is liable to pay a self-employment contribution of £104.

(2) Regulations made under subsection (1) shall not cause an insured person to pay contributions on the excess over £16,200 of the aggregate of his total reckonable earnings, reckonable emoluments and reckonable income in any contribution year.

(3) For the purposes of this section ‘contributions’ means employment contributions payable under section 10 and self-employment contributions payable under section 17C.

Regulations varying rates of payment of self-employment contributions.

17E.—(1) Regulations may alter the rates or amounts of self-employment contributions.

(2) Where regulations under subsection (1) are proposed to be made, a draft thereof shall be laid before each House of the Oireachtas and the regulations shall not be made until a resolution approving of the draft has been passed by each such House.

Regulations for collection of self-employment contributions, etc.

17F.—(1) For the purposes of self-employment contributions payable under section 17C (b) and (c), regulations may provide for—

(a) the time and manner of payment of self-employment contributions,

(b) the collection and the recovery of and the furnishing of details in relation to self-employment contributions,

(c) the charging of interest on arrears of self-employment contributions,

(d) the waiving of interest due on arrears of self-employment contributions,

(e) the estimation of amounts due in respect of self-employment contributions and appeals in relation to such estimates,

(f) the furnishing of returns by employers in relation to periods of insurable self-employment,

(g) the deduction by an employer from the reckonable emoluments of a self-employed contributor of any self-employment contribution reasonably believed by the employer to be due by the contributor, and adjustment in any case of overdeduction, and

(h) any matter ancillary or incidental to any of the matters referred to in any of the preceding paragraphs of this subsection.

(2) Without prejudice to the generality of subsection (1), regulations under that subsection may provide for the assignment of any function relating

to a matter referred to in that subsection to the Collector-General or to such person as may be specified.

(3) The provisions of any enactment or instrument made under statute relating to the estimation, collection or recovery of income tax or the inspection of records for those purposes or relating to appeals in relation to income tax shall with any necessary modifications apply in relation to self-employment contributions in respect of reckonable emoluments that the Collector-General is obliged to collect as they apply in relation to income tax.

(4) Self-employment contributions payable by a self-employed contributor for a contribution year under section 17 C (a) in respect of reckonable income shall be assessed, charged and paid in all respects as if they were an amount of income tax and they may be stated in one sum (hereafter in this subsection referred to as the ‘aggregated sum’) with the income tax contained in any computation of or assessment to income tax made by or on the self-employed contributor for the year of assessment (within the meaning of the Income Tax Acts) which coincides with the contribution year and for this purpose the self-employed contributions may be so stated notwithstanding that there is no amount of income tax contained in the said computation or assessment and all the provisions of the Income Tax Acts, other than any such provisions in so far as they relate to the granting of any allowance, deduction or relief, shall apply as if the aggregated sum were a single sum of income tax.

(5) Where an election made or deemed to be made under section 195 of the Income Tax Act, 1967 , has effect for the year of assessment the self-employment contributions payable by a wife shall be charged, collected and recovered as if they were the contributions of her husband provided that the question as to the amount of the self-employment contributions so payable in respect of the husband or the wife shall not be affected by the provisions of this subsection.

(6) In any proceedings instituted by virtue of this Act, a certificate purporting to be signed by the Collector-General or by an officer duly appointed by the Minister in that behalf which certifies that an amount in respect of employment or self-employment contribution is due and payable by the defendant shall be evidence until the contrary is proved that that amount is so due and payable.

Voluntary contributions.

17G.—(1) A voluntary contribution in the case of a person who becomes a voluntary contributor under section 17A (2) shall be at the rate of £208 in a contribution year payable at such time or times and in such manner as the Minister may prescribe.

(2) Subject to subsection (3), voluntary contributions paid by a person under subsection (1) shall be disregarded for all benefit other than old age (contributory) pension, widow's (contributory) pension and orphan's (contributory) allowance.

(3) Self-employment contributions paid by a person who, being a voluntary contributor becomes a self-employed contributor on or after 6th April, 1988, and any subsequent voluntary contributions paid by such persons, shall also be reckonable for—

(a) in the case of a person whose rate of voluntary contribution, immediately before ceasing to be a voluntary contributor, was determined under section 11 (1) (b) (i), deserted wife's benefit,

(b) in the case of a person whose rate of voluntary contribution, immediately before ceasing to be a voluntary contributor, was determined under section 11 (1) (b) (ii), retirement pension, deserted wife's benefit and death grant, and

(c) in the case of a person whose rate of voluntary contribution, immediately before ceasing to be a voluntary contributor, was determined under section 11 (1) (b) (iii), retirement pension and death grant.

(4) A voluntary contribution paid under subsection (1) shall be regarded as having been paid for each contribution week in that contribution year.

(5) This section shall come into operation on 6th April, 1988.”.

Amendment of First Schedule to Principal Act.

12. —The First Schedule to the Principal Act is hereby amended by the insertion after Part II of the following Part:

“PART IIA

EXCEPTED SELF-EMPLOYED CONTRIBUTORS

1. A prescribed relative of a self-employed contributor not being a partner, where he participates in the business of the self-employed contributor and performs the same tasks or ancillary tasks.

2. A self-employed contributor who by virtue of the provisions of sections 137 and 138 is in receipt of unemployment assistance.

3. A person, the aggregate of whose total reckonable income, reckonable emoluments or reckonable earnings (if any) before deducting so much of any deduction—

(a) allowed by virtue of the provisions referred to in section 33 of the Finance Act, 1975 , to be deducted or set off against income in charging it to income tax, or

(b) allowed in accordance with regulations 59 and 60 of the Income Tax (Employments) Regulations, 1960 (S.I. No. 28 of 1960) (inserted by the Income Tax (Employments) Regulations, 1972 (S.I. No. 260 of 1972)) to be deducted on payment of emoluments or earnings,

is below a prescribed amount.

4. An employed contributor or a person in receipt of a pension arising from a previous employment in the case of either of whom the reckonable income for the contribution year does not include income to which Chapter II or III of Part IV of the Income Tax Act, 1967 , applies.

5. A person employed in any one or more of the employments specified in Regulations under section 7, being employments in respect of which the contribution payable under the said Regulations are reckoned only in relation to the grant of widow's (contributory) pension, deserted wife's benefit or orphan's (contributory) allowance and are not reckoned in relation to the grant of any other benefit.”.

Amendment of section 78 of Principal Act (old age (contributory) pension).

13. —The Principal Act is hereby amended by the insertion after section 78 of the following section:

“78A. For the purposes of this Chapter in the case of a person who becomes a self-employed contributor on 6th April, 1988, and who at any time prior to that date was an employed contributor the date on which the person first entered into insurance or 6th April, 1988, whichever is the more favourable to him shall be regarded as the date of entry into insurance:

Provided that where a date other than that on which the clamiant first entered into insurance is so regarded, that date shall be regarded as the date of entry into insurance for the purposes of paragraphs (a) and (c) of section 79 (1).”.

Amendment of section 93 of Principal Act (widow's (contributory) pension).

14. —The Principal Act is hereby amended by the insertion after section 93 of the following section:

“93A. For the purposes of section 93 (1) (b) in the case of a person who becomes a self-employed contributor on 6th April, 1988, and who at any time prior to that date was an employed contributor the date on which the person first entered into insurance or 6th April, 1988, whichever is more favourable shall be regarded as the date of entry into insurance.”.

Decisions.

15. —Any question—

(a) as to whether an employment is or was an insurable self-employment,

(b) as to whether a person is or was in insurable self-employment, or

(c) as to what rate of self-employment contribution is or was payable by a self-employed contributor,

shall be decided by a deciding officer in accordance with Part VIII of the Principal Act.

Application of provisions of Principal Act relating to self-employed contributions and calculation of contributions.

16. —(1) The Minister may by regulations apply (with or without modification) to self-employed contributors and self-employment contributions payable under paragraph (a), (b) or (c) of section 17C of the Principal Act any provisions of the Principal Act which apply to employed contributors or employment contributions.

(2) Regulations may provide for adjustments in the calculation of amounts payable in respect of self-employment contributions to facilitate computation and for the elimination from self-employment contributions of amounts of not more than 5p and for the rounding up of amounts of more than 5p but less than 10p to 10p.

General Provisions as to Regulations.

17. —The following shall be subject to the sanction of the Minister for Finance—

(a) regulations for the purposes of sections 10, 17D and 17F of, and paragraphs 1 and 3 of Part IIA of the Second Schedule to, the Principal Act and section 16 (1) of this Act,

(b) a draft of regulations made under sections 17A (4), 17C (h) and 17E of the Principal Act.

Power to remove difficulties.

18. —(1) If in any respect any difficulty arises in bringing into operation this Part, the Minister may, with the consent of the Minister for Finance, by order do anything which appears to be necessary or expedient for bringing this Part into operation, and any such order may modify the provisions of this Part so far as may appear necessary or expedient for carrying the order into effect.

(2) Every order made by the Minister under this section shall be laid before each House of the Oireachtas as soon as may be after it is made, and if a resolution is passed by either House of the Oireachtas within the next twenty-one days on which such House has sat after the order is laid before it annulling such order, such order shall be annulled accordingly, but without prejudice to the validity of anything previously done under such order.

(3) No order may be made under this section after the expiration of one year after the commencement of this section.