Taxes Consolidation Act, 1997 (Number 39 of 1997)

774 Certain approved schemes: exemptions and reliefs.

[FA72 s16(1) to (5) and (7); CTA76 s164 and Sch3 PtI; FA88 s30(1) and (2)(a); FA91 s38; FA97 s41(1)(a) and (3)]

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(1) This section shall apply as respects—

(a) any approved scheme shown to the satisfaction of the Revenue Commissioners to be established under irrevocable trusts, or

(b) any other approved scheme as respects which the Revenue Commissioners, having regard to any special circumstances, direct that this section shall apply,

and any scheme which is for the time being within paragraph (a) or (b) is in this Chapter referred to as an “exempt approved scheme”.
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(1) This section shall apply as respects—

(a) any approved scheme shown to the satisfaction of the Revenue Commissioners to be established under irrevocable trusts,

(b) any approved scheme which is an overseas pension scheme, or

(c) any other approved scheme as respects which the Revenue Commissioners, having regard to any special circumstance, direct that this section shall apply,

and any scheme which is for the time being within paragraph (a), (b) or (c) is in this Chapter referred to as an “exempt approved scheme”.

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(2) This section shall apply only as respects income arising or contributions paid at a time when a scheme is an exempt approved scheme.

(3) Exemption from income tax shall, on a claim being made in that behalf, be allowed in respect of income derived from investments or deposits of a scheme if, or to such extent as the Revenue Commissioners are satisfied that, it is income from investments or deposits held for the purposes of the scheme.

(4)(a) In this subsection, “financial futures” and “traded options” mean respectively financial futures and traded options for the time being dealt in or quoted on any futures exchange or any stock exchange, whether or not that exchange is situated in the State.

(b) For the purposes of subsection (3), a contract entered into in the course of dealing in financial futures or traded options shall be regarded as an investment.

(5) Exemption from income tax shall, on a claim being made in that behalf, be allowed in respect of underwriting commissions if, or to such extent as the Revenue Commissioners are satisfied that, the underwriting commissions are applied for the purposes of the scheme, and in respect of which the trustees of the scheme would but for this subsection be chargeable to tax under Case IV of Schedule D.

(6)(a) For the purposes of this section and section 775—

(i) a reference to a “chargeable period” shall be construed as a reference to a “chargeable period or its basis period” (within the meaning of section 321), and

(ii) in relation to an employer whose chargeable period is a year of assessment, “basis period” means the period on the profits or gains of which income tax for that year of assessment is to be finally computed for the purposes of Case I or II of Schedule D in respect of the trade, profession or vocation of the employer.

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(aa) For the purposes of this section—

“relevant contributor” means a company (‘the first-mentioned company’) which pays contributions under an exempt approved scheme for the benefit of scheme members who are not its employees, where—

(i) the contributions are paid under the terms of a legally binding agreement between the first-mentioned company and another company or companies,

(ii) the agreement was entered into—

(I) between 2 or more companies (including the first-mentioned company) within a group,

(II) under a scheme of reconstruction or amalgamation,

(III) under a merger,

(IV) under a division, or

(V) under a joint venture,

(iii) the scheme members are either current or former employees of one of the parties to that agreement, and

(iv) the contributions would qualify for relief under paragraph (c) if the scheme members were employees of the first-mentioned company;

“group” means 2 or more companies which satisfy the conditions for group relief under section 411;

“scheme of reconstruction or amalgamation” has the same meaning as in section 615;

‘merger’ and ‘division’ have the same meaning as in section 638A;

“joint venture” means an agreement between 2 or more companies, other than within a group.

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(b) Any sum paid by an employer ^[13]>or relevant contributor^<[13] by means of contribution under the scheme shall for the purposes of Case I or II of Schedule D and of sections 83 and 707(4) be allowed to be deducted as an expense, or expense of management, incurred in the chargeable period in which the sum is paid but no other sum shall for those purposes be allowed to be deducted as an expense, or expense of management, in respect of the making, or any provision for the making, of any contributions under the scheme.

(c) The amount of an employer’s contributions which may be deducted under paragraph (b) shall not exceed the amount contributed by that employer under the scheme in respect of employees in a trade or undertaking in respect of the profits of which the employer is assessable to income tax or corporation tax, as the case may be.

(d) A sum not paid by means of an ordinary annual contribution shall for the purposes of paragraph (b) be treated, as the Revenue Commissioners may direct, either as an expense incurred in the chargeable period in which the sum is paid, or as an expense to be spread over such period of years as the Revenue Commissioners think proper.

(e) In the case of any employer for a chargeable period, being—

(i) where the chargeable period is an accounting period of a company, an accounting period ending on or before the 21st day of April, 1997, and

(ii) where the chargeable period is a year of assessment, any year of assessment the employer’s basis period for which ends on or before that date,

this subsection shall apply subject to paragraph 26 of Schedule 32.

(7)(a) Any ordinary annual contribution paid under the scheme by an employee shall, in assessing income tax under Schedule E, be allowed to be deducted as an expense incurred in the year in which the contribution is paid.

(b) Any contribution, which is not an ordinary annual contribution, paid or borne by an employee under the scheme may, as the Revenue Commissioners think proper—

(i) be treated, as respects the year in which it is paid, as an ordinary annual contribution paid in that year, or

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(ii) ~~^[2]>be apportioned^<[2]~~^[2]>in the case of a contribution to which paragraph (ba) applies, be apportioned^<[2] among such years as the Revenue Commissioners direct, and the amount of the contribution attributed thereby to any year shall be treated as an ordinary annual contribution paid in that year.
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(ii) in the case of—

(I) such a contribution made on retirement, following an application in writing made before 6 February 2003 by the employee in response to an invitation in writing under the scheme, pursuant to the rules of the scheme—

(A) to contribute towards the purchase for superannuation purposes of relevant benefits, consisting of only a pension on retirement not exceeding one-eightieth of the employee’s final remuneration for each year of service up to a maximum of 40 years and a lump sum not exceeding three-eightieths of the employee’s final remuneration for each year of service up to a maximum of 40 years, in respect of actual service by the employee before becoming a member of the scheme, and

(B) to make such purchase by way of such a contribution either on retirement or otherwise,

and as a consequence of which application the employee opted, or was treated by the scheme as opting, to make the contribution on retirement, for the purposes of receiving relevant benefits under the scheme in excess of the benefits which, if the application referred to had not been made, the employee would otherwise have been entitled to receive under those rules, or

(II) a contribution to which paragraph (ba) applies,

be apportioned among such years as the Revenue Commissioners direct, and the amount of the contribution attributed thereby to any year shall be treated as an ordinary annual contribution paid in that year.

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(ba) This paragraph applies to a contribution, which is not an ordinary annual contribution, and which—

(i) is required by the rules of the scheme to be made, in respect of a benefit to which section 772(3)(b) applies, by way of deduction from a lump sum payable to the employee in accordance with section 772(3)(f), or

(ii) is, following resumption of or change of employment, made, on retirement, in connection with the repayment by the employee to the scheme of superannuation contributions previously refunded to the employee or of relevant benefits provided to the employee on the employee’s leaving an employment in relation to service in which the superannuation contributions or, as the case may be, the relevant benefits related.

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(c) The aggregate amount of any contributions (whether ordinary annual contributions or contributions treated as ordinary annual contributions) allowed to be deducted in any year shall not exceed 15 per cent of the remuneration for that year of the office or employment in respect of which the contributions are paid.
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(c) The aggregate amount of annual contributions (whether ordinary annual contributions or contributions treated as ordinary annual contributions) allowed to be deducted in any year shall not exceed—

(i) in the case of an individual who at any time during the year of assessment was of the age of 30 years or over but had not attained the age of 40 years, 20 per cent,

(ii) in the case of an individual who at any time during the year of assessment was of the age of 40 years or over but had not attained the age of 50 years, 25 per cent,

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(iii) in the case of an individual who at any time during the year of assessment was of the age of 50 years or over, 30 per cent, and

(iv) in any other case, 15 per cent,
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(iii) in the case of an individual who at any time during the year of assessment was of the age of 50 years or over but had not attained the age of 55 years, 30 per cent,

(iv) in the case of an individual who at any time during the year of assessment was of the age of 55 years or over but had not attained the age of 60 years, 35 per cent,

(v) in the case of an individual who at any time during the ear of assessment was of the age of 60 years or over, 40 per cent, and

(vi) in any other case, 15 per cent,

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of the remuneration for that year of the office or employment in respect of which the contributions are paid.

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(d) Where in any year of assessment a reduction or a greater reduction would be made under this section in the remuneration of an individual but for an insufficiency of remuneration, the amount of the reduction which would have been made but for that reason, less the amount of the reduction which is made in that year, shall be carried forward to the next year of assessment, and shall be treated for the purposes of relief under this section as the amount of an annual contribution paid in the next year of assessment.

(e) In so far as an amount once carried forward under paragraph (d) (and treated as an amount of an annual contribution paid in the next year of assessment) is not deducted from or set off against the individual’s remuneration for that year of assessment, it shall be carried forward again to the following year of assessment (and treated as the amount of an annual contribution paid in that year of assessment) and so on for succeeding years.

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(7A) Subsection (7)(b)(ii) shall operate notwithstanding any limitation in section 865(4) on the time within which a claim for a repayment of tax is required to be made where the officer or employee makes a claim for relief in respect of a contribution which is not an ordinary annual contribution within 4 years from the end of the year of assessment in which such contribution is paid or borne by the officer or employee. Section 865(6) shall not prevent the Revenue Commissioners from making a repayment of tax as a consequence of such a claim, where a valid claim for a repayment of tax (within the meaning of section 865(1)(b)) has been made by the officer or employee.

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(8) Subject to paragraphs (b) and (ba) of subsection (7) where in relation to a year of assessment any contribution, which is not an ordinary annual contribution, is paid by an employee under the scheme after the end of the year of assessment but before the specified return date for the chargeable period (within the meaning of ~~^[11]>Part 41^<[11]~~^[11]>Part 41A^<[11]), the contribution may, if the individual so elects on or before that date, be treated for the purposes of this section as paid in the earlier year (and not in the year in which it is paid); but where the amount of that contribution, together with any other contribution to the scheme paid by the individual in the year to which the contribution relates (or treated as so paid by virtue of any previous election under this subsection), exceeds the maximum amount of contributions allowed to be deducted in that year, the election shall have no effect as respects the excess.