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Amendment of Chapter 5 (policyholders — new basis) of Part 26 of Principal Act.
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43.— (1) Chapter 5 of Part 26 of the Principal Act is amended—
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(a) in section 730C(1)(a) by substituting the following for subparagraph (iv):
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“(iv) the ending of a relevant period, where such ending is not otherwise a chargeable event within the meaning of this section, and for the purposes of this subparagraph ‘relevant period’, in relation to a life policy, means a period of 8 years beginning with the inception of the policy and each subsequent period of 8 years beginning immediately after the preceding relevant period,”,
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(b) by substituting the following for section 730D(1A):
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“730D.— (1A) (a) Where—
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(i) a chargeable event occurs in relation to a life policy, and
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(ii) a chargeable event within the meaning of section 730C(1)(a)(iv) occurred previously in relation to that policy,
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then the gain arising on the chargeable event referred to in subparagraph (i) shall be determined as if section 730C(1)(a)(iv) had not been enacted.
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(b) Where paragraph (a) applies and the chargeable event referred to in subparagraph (i) of that paragraph is not the surrender or assignment of part of the rights conferred by the life policy, any first tax (within the meaning of section 730F(1A)) shall, for the purposes of subsection (3), be added to the value of the rights or other benefits conferred by that policy immediately before the chargeable event.
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(c) Where paragraph (a) applies and the chargeable event referred to in subparagraph (i) of that paragraph is the surrender or assignment of part of the rights conferred by the life policy, any first tax (within the meaning of section 730F(1A)) shall, for the purposes of subsection (3), be deducted from the amount of premiums taken into account in determining the gain on the happening of the chargeable event.”,
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(c) in section 730D(3), in the construction of P, by substituting “of a chargeable event (not being a chargeable event within the meaning of section 730C(1)(a)(iv)),” for “of a chargeable event,”, and
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(d) in section 730F(1A)—
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(i) in the definition of “first tax” by substituting “within the meaning of section 730C(1)(a)(iv) in relation to the life policy and which has not been repaid;” for “referred to in subsection 730D(1A)(b) in relation to the life policy;”,
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(ii) by substituting the following for the definition of “new gain”:
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“ ‘ new gain ’, in relation to a life policy, means a gain referred to in section 730D(1A)(a) determined in accordance with section 730D in relation to the life policy;”,
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(iii) in paragraph (b)(i) by substituting “section 730D(1A)(a)” for “subsection 730D(1A)”,
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(iv) in paragraph (b)(ii) by deleting “, subject to subparagraph (iii)”, and
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(v) by deleting subparagraph (iii) of paragraph (b).
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(2) This section applies and has effect as respects any chargeable event (within the meaning of section 730C(1)(a)(iv) of the Principal Act) occurring on or after the passing of this Act.
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