Finance Act 2003

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Pension arrangements.

14.—(1) The Principal Act is hereby amended—

(a) in Part 19, by substituting the following for subsection (2) of section 608:

“(2) A gain shall not be a chargeable gain if accruing to a person from the person's disposal of assets held by that person as part of a fund approved under section 774, 784(4) or 785(5) or held by that person as PRSA assets (within the meaning of section 787A).”,

(b) in Chapter 1 of Part 30—

(i) in section 774—

(I) by substituting in subsection (7)(b)(ii), “in the case of a contribution to which paragraph (ba) applies, be apportioned” for “be apportioned”,

(II) by inserting the following after paragraph (b) of subsection (7):

“(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.”,

(III) by inserting the following after paragraph (c) of subsection (7):

“(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.”,

and

(IV) by inserting the following after subsection (7):

“(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 Part 41), 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.”,

(ii) in section 776—

(I) by substituting in subsection (2)(b)(ii), “in the case of a contribution to which paragraph (ba) applies, be apportioned” for “be apportioned”,

(II) by the insertion after subsection (2)(b) of the following paragraph:

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

(i) is required by the statute under which the scheme is established or by any other statute or regulation to be made in respect of the provision of a pension for any widow, widower, children or dependants of the officer or employee by way of a deduction from a lump sum payable to the employee on retirement, or

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

(III) by inserting the following after paragraph (c) of subsection (2):

“(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.”,

and

(IV) by inserting the following after subsection (2):

“(3) Subject to paragraphs (b) and (ba) of subsection (2), 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 Part 41), 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.”,

(c) in Chapter 2 of Part 30—

(i) in section 783—

(I) in subsection (1)(a)—

(A) by substituting “In this Chapter” for “In this section”,

(B) by inserting the following after the definition of “approved retirement fund”:

“ ‘close company’ has the same meaning as in section 430;

‘connected person’ has the same meaning as in section 10;”,

and

(C) by inserting the following after the definition of “investment income”:

“ ‘participator’ has the same meaning as in section 433;”,

(II) in subsection (2)—

(a) by substituting in paragraph (a), “benefits of a kind referred to in paragraphs (b) and (c) of section 772(3), including any similar benefit provided under a statutory scheme established under a public statute,” for “a lump sum payable on the termination of the service through death before the age of 70 years or some lower age or disability before the age of 70 or some lower age”,

and

(b) by inserting the following after paragraph (b):

“(c) For the purposes of calculating the amount of any reduction in net relevant earnings in respect of any qualifying premium or of any PRSA contribution (within the meaning of Chapter 2A of this Part) this Chapter and Chapter 2A shall apply as if any contribution by an employee to a sponsored superannuation scheme relating to service in an office or employment, which is not a pensionable office or employment within the meaning of paragraph (a), were a payment of a qualifying premium for which relief had been given under this Chapter.”,

(ii) in section 784A, by inserting the following after subsection (1):

“(1A) Without prejudice to the generality of subsection (1)(d), where assets of an approved retirement fund are used in connection with any of the transactions referred to in subsection (1B), the transaction shall be regarded as a distribution for the purposes of this section of the amount specified in that subsection.

(1B) The transactions referred to in subsection (1A) and the amount to be regarded as a distribution in relation to any such transaction are as follows—

(a) in the case of a loan made to the individual beneficially entitled to the assets in an approved retirement fund or to any person connected with that individual, the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of the assets of the approved retirement fund used to make such a loan or used as security for such a loan,

(b) in the case of the acquisition of property from the individual beneficially entitled to the assets in an approved retirement fund or from any person connected with that individual, the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of the assets in the approved retirement fund used in or in connection with that acquisition,

(c) in the case of the sale of any asset in an approved retirement fund to the individual beneficially entitled to the assets in an approved retirement fund or to any person connected with that individual, the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of the asset sold,

(d) in the case of the acquisition of—

(i) any property which is to be used as holiday property, or

(ii) property which is to be used as a residence,

by the individual beneficially entitled to the assets in the approved retirement fund or by any person connected with that individual, the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of the assets in the approved retirement fund used in or in connection with that acquisition, but where property is acquired, on or after 6 February 2003, in relation to the acquisition of which a distribution is not treated as arising under this Chapter and that property commences to be used for one of the purposes mentioned in subparagraphs (i) or (ii) of this paragraph, the distribution shall be treated as arising at the date such use commences and the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of the assets of the approved retirement fund used in or in connection with the acquisition together with any assets used in or in connection with any expenditure on the improvement or repair of the property in question,

(e) in the case of the acquisition of shares or any other interest in a company, which is a close company or which would be a close company but for the fact that the company is not resident in the State, in relation to which the individual beneficially entitled to the assets in the approved retirement fund or a person connected with that individual is a participator, the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of assets in the approved retirement fund used in or in connection with that acquisition, and

(f) in the case of the acquisition of tangible moveable property, the amount to be regarded as a distribution for the purposes of this section is an amount equal to the value of the assets in the approved retirement fund used in or in connection with that acquisition.

(1C) An amount which has been regarded as a distribution from an approved retirement fund, in accordance with this section, shall not be regarded as an asset in that approved retirement fund for any purpose.

(1D) Any property, the acquisition or sale of which is regarded as giving rise to a distribution of assets in an approved retirement fund, shall not be regarded as an asset in that approved retirement fund.

(1E) For the purposes of subsection (1B) references to the value of an asset in an approved retirement fund shall, except where the asset is cash, be construed as references to the market value of the asset, within the meaning of section 548.”,

(iii) in section 784A, by inserting the following after subsection (7):

“(8) (a) Within one month of commencing to act as manager of approved retirement funds, a qualifying fund manager shall give notice to that effect to the Revenue Commissioners.

(b) A qualifying fund manager who commenced to act as manager of an approved retirement fund prior to the passing of the Finance Act 2003 shall give notice to that effect to the Revenue Commissioners within three months of the passing of that Act.

(c) A notice under paragraph (a) or (b) shall specify the date the qualifying fund manager commenced to so act.”,

and

(iv) in section 784C(5), by substituting “, including any distribution or amount regarded under this Chapter as a distribution, other than—” for “other than—”,

(d) in Chapter 2A of Part 30—

(i) in subsection (1) of section 787E, by substituting the following for subparagraphs (a) to (c):

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

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

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

and

(d) in any other case, 15 per cent,”,

(ii) in subsection (3) of section 787E, by substituting “Where during a year of assessment an individual is a member either of an approved scheme or of a statutory scheme (hereafter referred to as a ‘scheme’) in relation to an office or employment, not being a scheme under which the benefits provided in respect of that service are limited to benefits of a kind referred to in paragraphs (b) and (c) of section 772(3), including any similar benefit provided under a statutory scheme established under a public statute,” for “Where during a year of assessment an individual is a member either of an approved scheme or of a statutory scheme (hereafter referred to as a ‘scheme’) in relation to an office or employment”,

(iii) in section 787G, by inserting the following after subsection (4):

“(4A) Without prejudice to the generality of subsection (4), the circumstances in which a PRSA administrator shall, for the purposes of this Chapter, be treated as making assets of a PRSA available to an individual shall include the use of those assets in connection with any transaction which would, if the assets were assets of an approved retirement fund, be regarded under section 784A as giving rise to a distribution for the purposes of that section and the amount to be regarded as made available shall be calculated in accordance with that section.”,

(e) in Chapter 4 of Part 30, by inserting the following after section 790:

(f) in Part 42, by substituting in subparagraph (ii) of paragraph (g) (inserted by the Pensions (Amendment) Act 2002 ) of section 986(1), “Chapter 1, Chapter 2 or Chapter 2A of Part 30” for “Chapter 1 or Chapter 2A of Part 30”,

and

(g) in Schedule 29, in column 3, by inserting “section 784A(8)”, after “section 734(5)”.

(2) (a) Paragraphs (c)(i)(II) and (d) of subsection (1) shall apply as on and from 1 January 2003;

(b) paragraphs (b), (c)(i)(I), (c)(ii) and (c)(iv) of subsection (1) shall be taken to have come into force and have effect as on and from 6 February 2003;

(c) paragraph (e) of subsection (1) shall be taken to have come into force and have effect as on and from 1 January 2002, but shall not apply in respect of any employee's contribution, qualifying premium or PRSA contribution made before 4 December 2002;

(d) subsection (1) (other than paragraphs (b), (c)(i), (c)(ii), (c)(iv), (d) and (e)) shall have effect as on and from the passing of this Act.