Taxes Consolidation Act, 1997 (Number 39 of 1997)

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Chapter 4 Taxation of Assurance Companies — New Basis

730A Profits of life business: new basis.

(1) In this Chapter and Chapter 5 of this Part—

“assurance company” means an assurance company chargeable to corporation tax;

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“credit union” has the meaning assigned to it in section 2 of the Credit Union Act 1997;

“financial institution” means—

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(a) a person who holds a licence under section 9 of the Central Bank Act 1971,
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(a) a person who holds a licence under section 9 or an authorisation granted under section 9A of the Central Bank Act 1971,

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(b) a person referred to in section 7(4) of the Central Bank Act 1971, or

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“new basis business” means—

(a) where an assurance company was carrying on life business on 1 April 2000, other than where the assurance company’s trading operations at that time consisted solely of foreign life assurance business within the meaning of section 451(1)—

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(i) all policies and contracts commenced by the assurance company on or after 1 January 2001, and
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(i) all policies and contracts commenced by the assurance company on or after 1 January 2001 except those which refer to industrial assurance business, and

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(ii) all policies and contracts commenced by the assurance company before that date in so far as they relate to—

(I) pension business and general annuity business, and

(II) permanent health insurance, in respect of which the profits arising to the assurance company were before 1 January 2001 charged to tax under Case I of Schedule D,

(b) where an assurance company was carrying on life business on 1 April 2000, and the assurance company’s trading operations at that time consisted solely of foreign life assurance business within the meaning of section 451(1), all policies and contracts commenced by the assurance company on or after 1 January 2001, and

(c) where an assurance company was not carrying on life business on 1 April 2000, subject to subsection (2), all policies and contracts commenced by the assurance company ~~^[3]>from the time it began to carry on life business.^<[3]~~^[3]>from the time it began to carry on life business;^<[3]

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“Service” means the Courts Service;

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“sinking fund or capital redemption business” has the same meaning as in section 3 of the Insurance Act, 1936.

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(2) Where an assurance company begins to carry on life business after 1 April 2000 and before 31 December 2000, the assurance company may elect that all policies and contracts commenced by it before 31 December 2000 be treated as not being new basis business in so far as they relate to life business (other than pension business and general annuity business).

(3) Life business of an assurance company, in so far as it comprises new basis business, shall for the purposes of the Corporation Tax Acts be treated as though it were a separate business, that is, a business separate from other business (if any) carried on by the assurance company.

(4) Notwithstanding Chapters 1 and 3 of this Part, an assurance company shall be charged to corporation tax in respect of the profits of new basis business under Case I of Schedule D and those profits shall, subject to subsection (5), be computed in accordance with the provisions applicable to that Case of that Schedule.

(5) Where all or part of the profits of an assurance company are, under this Chapter, to be computed in accordance with the provisions applicable to Case I of Schedule D, the following provisions shall also apply—

(a) such part of those profits as belongs or is allocated to, or is expended on behalf of, policyholders or annuitants shall be excluded in making the computation, ~~^[9]>and^<[9]~~

(b) there shall not be excluded in making the computation any remaining part of those profits reserved for policyholders or ~~^[10]>annuitants.^<[10]~~^[10]>annuitants, and^<[10]

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(c) for the purposes of Schedule 24, any foreign tax arising in respect of the profits excluded in making the computation under paragraph (a) shall be treated as solely attributable to those profits so excluded and that foreign tax—

(i) shall not be allowed as a credit or deduction against corporation tax arising on any other profits of the assurance company,

(ii) shall not be a foreign tax by which income is reduced in accordance with paragraph 7(3)(c) of that Schedule, and

(iii) shall not otherwise be deducted from any other profits of the assurance company.

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(6) Notwithstanding the provisions of Chapter 3 of Part 12, where an assurance company incurs a loss in respect of new basis business, the amount of the loss which may be set off against profits of any other business of the company shall not exceed such amount of those profits computed under the provisions of Case 1 of Schedule D and section 710.

(7) (a) This subsection applies to a company carrying on any mutual life assurance business.

(b) Subject to paragraph (c), in respect of each accounting period of a company to which this subsection applies, one-twentieth of the amount determined under subsection (8)(c) shall be treated as annual profits or gains within Schedule D and shall be chargeable to corporation tax under Case III of that Schedule.

(c) Where for an accounting period the value referred to in subsection (8)(c)(ii) is not less than such value at 31 December 2000, but exceeds the value referred to in subsection (8)(c)(i), an amount equal to one-twentieth of the excess may be deducted from annual profits or gains chargeable to corporation tax by virtue of paragraph (b), of the previous accounting period (so long as it commences on or after 1 January 2001) or a subsequent accounting period.

(8) (a) In this subsection “statutory accounts”, in relation to a company means—

(i) in the case of a company (in this definition referred to as the “resident company”) resident in the State, the profit and loss account and balance sheet of that company, and

(ii) in the case of a company (in this definition referred to as the “non-resident company”) not resident in the State but carrying on a trade in the State through a branch or agency, the profit and loss account and balance sheet of the company,

a report in respect of which is required to be made to the members of the company by ~~^[12]>an auditor appointed under section 160 of the Companies Act, 1963^<[12]~~^[12]>a statutory auditor appointed under Chapter 18 of Part 6 of the Companies Act 2014^<[12], or under the law of the State in which the resident company or non-resident company is incorporated and which corresponds to that section.

(b) For the purposes of this subsection the liabilities of an assurance company attributable to any business at any time shall be ascertained by reference to the net liabilities of the company as valued by an actuary for the purposes of the statutory accounts in relation to the company.

(i) the total value at the end of the accounting period,

less—

(ii) the total value at the beginning of the accounting period,

of all funds the allocation of which to policyholders has not been determined; but in the case of an overseas life assurance company, the values referred to in subparagraphs (i) and (ii) at a time shall be multiplied by the following fraction—