Taxes Consolidation Act, 1997 (Number 39 of 1997)
784 Retirement annuities: relief for premiums.
[ITA67 s235(1) to (5) and (10); FA74 s65]
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(1) Where an individual—
(a) is (or but for an insufficiency of profits or gains would be) chargeable to tax in respect of relevant earnings from any trade, profession, office or employment carried on or held by him or her, and
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(b) pays a premium or other consideration under an annuity contract for the time being approved by the Revenue Commissioners as being a contract by which the main benefit secured is a life annuity for the individual in his or her old age or under a contract for the time being approved under section 785 (in this Chapter referred to as a “qualifying premium”),
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(b) pays a premium or other consideration under an annuity contract for the time being approved by the Revenue Commissioners as being a contract by which the main benefit secured is, or would, but for the exercise of an option by the individual under subsection (2A), be a life annuity for the individual in his or her old age or under a contract for the time being approved under section 785 (in this Chapter referred to as a “qualifying premium”),
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relief from income tax may be given in respect of the qualifying premium under section 787.
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(1) (a) Where an individual, being an individual referred to in paragraph (b), pays a premium or other consideration under an annuity contract for the time being approved by the Revenue Commissioners as being a contract by which the main benefit secured is, or would, but for the exercise of an option by the individual under subsection (2A), be a life annuity for the individual in his or her old age or under a contract for the time being approved under section 785 (in this Chapter referred to as a “qualifying premium”), relief from income tax may be given in respect of the qualifying premium under section 787.
(b) An individual referred to in this paragraph is an individual who is or was (or but for an insufficiency of profits or gains would be or would have been) for any year of assessment chargeable to tax in respect of relevant earnings from any trade, profession, office or employment carried on or held by him or her and who paid a qualifying premium in that year.
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(2)(a) [5]>Subject to subsection (3)<[5][5]>Subject to subsections (2A) and (3) and to section 786,<[5], the Revenue Commissioners shall not approve a contract unless it appears to them to satisfy the following conditions—
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(i) that it is made by the individual with a person lawfully carrying on in the State the business of granting annuities on human life,
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(i) that it is made by the individual with a person lawfully carrying on the business of granting annuities on human life, and, where that person—
(I) is not resident in the State, or
(II) is not trading in the State through a fixed place of business,
that person is an insurance undertaking authorised to transact insurance business in the State under Directive 2002/83/EC of the European Parliament and of the Council of 5 November 20021,
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(ii) that it includes provision securing that no annuity payable under it shall be capable in whole or in part of surrender, commutation or assignment, and
(iii) that it does not—
(I) provide for the payment by that person during the life of the individual of any sum except sums payable by means of annuity to the individual,
(II) provide for the annuity payable to the individual to commence before the individual attains the age of 60 years or after he or she attains the age of [6]>70 years<[6][6]>75 years<[6],
(III) provide for the payment by that person of any other sums except sums payable by means of annuity to the individual’s [18]>widow or widower<[18][18]>widow, widower or surviving civil partner<[18] and any sums which, in the event of no annuity becoming payable either to the individual or to a [18]>widow or widower<[18][18]>widow, widower or surviving civil partner<[18], are payable to the individual’s personal representatives by means of return of premiums, reasonable interest on premiums or bonuses out of profits,
(IV) provide for the annuity, if any, payable to a [18]>widow or widower<[18][18]>widow, widower or surviving civil partner<[18] of the individual to be of a greater annual amount than that paid or payable to the individual, or
(V) provide for the payment of any annuity otherwise than for the life of the annuitant.
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(b) Notwithstanding paragraph (a), the contract may provide for the payment to the individual, at the time the annuity commences to be payable, of a lump sum by means of commutation of part of the annuity not exceeding 25 per cent of the value of the annuity if the individual elects, at or before the time when the annuity first becomes payable to him or her, to be paid the lump sum.
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(b) Notwithstanding paragraph (a)—
(i) the contract may provide for the payment to the individual, at the time the annuity commences to be payable or, where the individual opts in accordance with subsection (2A), at the time of the transfer referred to in that subsection, of a lump sum by means of commutation of part of the annuity where the individual elects, at or before the time when the annuity first becomes payable to him or her or before the date of such transfer, to be paid the lump sum, and
(ii) the amount payable under subparagraph (i) shall not exceed 25 per cent of the value of the annuity payable or the value of the annuity which would have been payable if the individual had not opted in accordance with subsection (2A).
(c) The reference in paragraph (b)(i) to the commutation of part of the annuity shall, in a case where the individual has opted in accordance with subsection (2A), be construed as a reference to the commutation of the annuity which would, but for such election, be payable if the individual opted to have the annuity paid with effect from the date of the transfer referred to in that subsection.
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(2A) The Revenue Commissioners shall not approve a contract unless it appears to them that the contract provides for the individual entitled to an annuity under the contract to exercise, on or before the date on which that annuity would otherwise become payable, an option for the transfer by the person with whom the contract is made, on or after that date, to—
(a) the individual, or
(b) an approved retirement fund,
of an amount equivalent to the amount determined by the formula—
A – B
where—
A is the amount equal to the value of the individual’s accrued rights under the contract exclusive of any lump sum paid in accordance with paragraph (b) of subsection (2), and
B is the amount or value of assets which the person with whom the contract is made is required, in accordance with section 784C, to transfer to an approved minimum retirement fund held in the name of the individual or to apply in purchasing an annuity payable to the individual with effect from the date of the exercise of the said option.
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(2B) Where an individual opts in accordance with paragraph (a) of subsection (2A), the amount paid to the individual by virtue of that paragraph other than the amount payable by virtue of paragraph (b) of subsection (2) shall be regarded as income of the individual chargeable to income tax under Case IV of Schedule D for the year of assessment in which the payment is made.
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(2B) (a) Where an individual opts in accordance with subsection (2A), any amount paid to the individual by virtue of that subsection, other than an amount payable by virtue of paragraph (b) of subsection (2), [12]>shall<[12][12]>shall, notwithstanding anything in section 18 or 19,<[12] be regarded as a payment of emoluments to which Schedule E applies and, accordingly, the provisions of Chapter 4 of Part 42 shall, subject to paragraph (b), apply to any such payment.
(b) The person making a payment to which paragraph (a) refers shall deduct tax from the payment at the higher rate for the year of assessment in which the payment is made unless that person has received from the Revenue Commissioners [25]>a [25]>a revenue payroll notification (within the meaning of section 983)<[25] for that year in respect of the individual beneficially entitled to the payment.[11]>certificate of tax free allowances<[11][11]>certificate of tax credits and standard rate cut-off point<[11] or a tax deduction card<[25]
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(2C) Notwithstanding anything contained in this Part, a retirement annuity contract shall not cease to be an approved contract because of any provision in law, whether or not contained in the contract, whereby the parties to the contract may cancel the contract and effect a transfer of assets into one or more than one PRSA of which the individual who is a party to that approved contract is the contributor.
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(2D) Notwithstanding any other provisions in this Chapter, a retirement annuity contract shall neither cease to be an annuity contract for the time being approved by the Revenue Commissioners nor shall the Revenue Commissioners be prevented from approving such a contract notwithstanding that the contract provides for the annuity secured by the contract for an individual to be commuted to such extent as may be necessary for the purpose of discharging a tax liability in respect of the individual, under the provisions of Chapter 2C of this Part, in connection with the annuity.
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(2E) Notwithstanding any other provision of this Chapter, a retirement annuity contract shall not cease to be an annuity contract for the time being approved by the Revenue Commissioners, nor shall the Revenue Commissioners be prevented from approving such a contract, notwithstanding that the contract provides for the annuity secured by the contract for an individual to be commuted, where the individual comes within the provisions of section 787TA, to such extent as may be necessary for the purpose of the exercise of an option by the individual in accordance with that section requiring an amount representing the value of, or part of the value of, the individual’s accrued rights under the contract at the date of the exercise of the option to be transferred to the individual by the person with whom the contract is made.
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(2F) Notwithstanding any other provision of this Chapter, a retirement annuity contract shall not cease to be an annuity contract for the time being approved by the Revenue Commissioners where, notwithstanding anything contained in the contract as approved—
(a) the person with whom the contract is made—
(i) on or before 31 March 2017—
(I) commences payment of an annuity to the individual,
(II) pays a lump sum of a kind referred to in subsection (2)(b) to the individual, or
(III) transfers the value of the individual’s accrued rights under the contract in accordance with subsection (2A), or
(ii) in priority to any payment or transfer referred to in subparagraph (i), makes available from the cash and other assets representing the value of the individual’s accrued rights under the contract, to such extent as may be necessary, an amount for the purposes of discharging a tax liability in relation to the individual under the provisions of Chapter 2C of this Part in respect of the contract,
(b) insofar as subparagraph (i) of paragraph (a) is concerned, the annuity contract is deemed to be a vested RAC in accordance with section 787O(6), and
(c) insofar as subparagraph (ii) of paragraph (a) is concerned, the annuity contract is a vested RAC within the meaning of section 787O(1).
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(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 conditions referred to in subsection (2), notwithstanding that the contract provides for one or more of the following matters—
(a) the payment after the individual’s death of an annuity to a dependant, not being the [19]>widow or widower<[19][19]>widow, widower or surviving civil partner<[19] of the individual;
(b) the payment to the individual of an annuity commencing before he or she attains the age of 60 years, where the annuity is payable on the individual becoming permanently incapable through infirmity of mind or body of carrying on his or her own occupation or any occupation of a similar nature for which he or she is trained or fitted;
(c) where the individual’s occupation is one in which persons customarily retire before attaining the age of 60 years, the annuity to commence before the individual attains that age (but not before he or she attains the age of 50 years);
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(d) where the individual’s occupation is one in which persons customarily retire after attaining the age of 70 years, the annuity to commence after the individual attains that age (but not after he or she attains the age of 80 years);
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(e) the annuity payable to any person to continue for a term certain (not exceeding 10 years) notwithstanding his or her death within that term, or the annuity payable to any person to terminate, or be suspended, on [20]>marriage (or remarriage)<[20][20]>marriage or remarriage or on entering into a civil partnership or a new civil partnership<[20] or in other circumstances;
(f) in the case of an annuity which is to continue for a term certain, the annuity to be assignable by will and, in the event of any person dying entitled to the annuity, the annuity to be assignable by his or her 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 the annuity to a legacy or to a share or interest in the estate.
(4) Subsections (1) to (3) shall apply in relation to a contribution under a trust scheme or part of 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 in subsection (2)(a)(i) there shall be substituted a condition that the scheme (or the part of 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 those individuals with or without subsidiary benefits for their [21]>families or dependants<[21][21]>families, civil partners, dependants or the children of their civil partners<[21], 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 modifications 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 referred to in paragraph (b) under a scheme or part of a scheme for the time being approved under this subsection.
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(4A) At any time when the person referred to in subsection (2)(a)(i) or in section 785(1)—
(a) is not resident in the State, or
(b) is not trading in the State through a fixed place of business,
the person shall, in relation to the discharge of all duties and obligations imposed [15]>by this section or, as the case may be, by section 785<[15][15]>by this section or, as the case may be, by section 785 [17]>and by Chapter 2C<[17][17]>, by Chapter 2C and by section 125B of the Stamp Duties Consolidation Act 1999<[17]<[15]—
(i) enter into a contract with the Revenue Commissioners enforceable in a Member State of the European Communities in relation to the discharge of those duties and obligations and in entering into such a contract the parties to the contract shall acknowledge and agree in writing that—
(I) it is governed solely by the laws of the State, and
(II) that the courts of the State shall have exclusive jurisdiction in determining any dispute arising under it,
or
(ii) ensure that there is a person resident in the State (referred to in this paragraph as the “appointed person”), appointed by the person, to be responsible for the discharge of those duties and obligations and the person shall notify the Revenue Commissioners of the appointment of the appointed person and the identity of the appointed person.
(4B) The Revenue Commissioners may by notice in writing require the person to whom premiums are payable under any contract for the time being approved under this section or under section 785, or the appointed person referred to in subsection (4A)(ii), as the case may be, to provide, within 30 days of the date of such notice, such information and particulars as may be specified in the notice as they may reasonably require for the purposes of this Chapter, and, without prejudice to the generality of the foregoing, such information and particulars may include—
(a) the name, address and PPS Number (within the meaning of section 787A(1)) of the individual with whom the contract has been made,
(b) the name, address and PPS Number (within that meaning) of the individual or individuals to whom any payment of an annuity in respect of the contract has been made, and
(c) the amount of the annuity payments referred to in paragraph (b).
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(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 trust 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 so withdrawn, there shall be made such assessments as may be appropriate for the purpose of withdrawing any reliefs given under this Chapter consequent on the approval.
(6) 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.
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(7) Notwithstanding anything in section 18 or section 19, any payment of an annuity made on or after 1 January 2002 in respect of an annuity contract approved under this section or under section 785 shall be regarded as a pension chargeable to tax under Schedule E, and Chapter 4 of Part 42 shall apply accordingly.
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(8) Where an annuity contract is a vested RAC within the meaning of section 787O(1), the provisions of section 784A(4) shall apply to the cash and other assets representing the individual’s accrued rights under the contract at the time of death of the individual as if that cash and those other assets were assets of an approved retirement fund.
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Footnotes
1 OJ No. L345, 19.12.2002, p.1
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[1]
Substituted by FA99 s19(1)(b)(ii)(III). Paragraph (b), other than subparagraph (vi), of subsection (1) shall apply as respects any annuity contract for the time being approved by the Revenue Commissioners under section 784 entered into on or after the 6th day of April, 1999.
[2]
Inserted by FA99 s19(1)(b)(ii)(IV). Paragraph (b), other than subparagraph (vi), of subsection (1) shall apply as respects any annuity contract for the time being approved by the Revenue Commissioners under section 784 entered into on or after the 6th day of April, 1999.
[3]
Deleted by FA99 s19(1)(b)(ii)(V). Paragraph (b), other than subparagraph (vi), of subsection (1) shall apply as respects any annuity contract for the time being approved by the Revenue Commissioners under section 784 entered into on or after the 6th day of April, 1999.
[4]
Substituted by FA99 s19(1)(b)(ii)(I). Paragraph (b), other than subparagraph (vi), of subsection (1) shall apply as respects any annuity contract for the time being approved by the Revenue Commissioners under section 784 of the Principal Act entered into on or after the 6th day of April, 1999.
[5]
Substituted by FA99 s19(1)(b)(ii)(II)(A). Paragraph (b), other than subparagraph (vi), of subsection (1) shall apply as respects any annuity contract for the time being approved by the Revenue Commissioners under section 784 entered into on or after the 6th day of April, 1999.
[6]
Substituted by FA99 s19(1)(b)(ii)(II)(B). Paragraph (b), other than subparagraph (vi), of subsection (1) shall apply as respects any annuity contract for the time being approved by the Revenue Commissioners under section 784 entered into on or after the 6th day of April, 1999.
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Substituted by FA02 s10(1)(b). Applies as respects the year of assessment 2002 and subsequent years of assessment.
[11]
Substituted by FA03 sched6(1)(g). This section shall be deemed to have come into force and take effect as on and from 6 April 2001.
[12]
Substituted by FA05 s21(1)(b)(i)(II). Applies as respects any annuity contract for the time being approved by the Revenue Commissioners entered into on or after 1 January 2005.
[13]
Inserted by FA05 s21(1)(b)(i)(III). Applies as respects any annuity contract for the time being approved by the Revenue Commissioners entered into on or after 1 January 2005.
[14]
Substituted by FA05 s21(1)(b)(i)(I). Applies as respects any annuity contract for the time being approved by the Revenue Commissioners entered into on or after 1 January 2005.