Number 6 of 2006

FINANCE ACT 2006

ARRANGEMENT OF SECTIONS

PART 1

Income Tax, Corporation Tax and Capital Gains Tax

Chapter 1

Interpretation

Section

1. Interpretation (Part 1).

Chapter 2

Income Tax

2. Amendment of section 15 (rate of charge) of Principal Act.

3. Personal tax credits.

4. Age exemption.

5. Amendment of section 467 (employed person taking care of incapacitated individual) of Principal Act.

6. Amendment of section 472C (relief for trade union subscriptions) of Principal Act.

7. Amendment of section 473 (allowance for rent paid by certain tenants) of Principal Act.

8. Relief for service charges.

9. Amendment of section 248 (relief to individuals on loans applied in acquiring interest in companies) of Principal Act.

10. Amendment of Schedule 13 (accountable persons for purposes of Chapter 1 of Part 18) to Principal Act.

11. Computational rules and allowable deductions.

12. Amendment of section 664 (relief for certain income from leasing of farm land) of Principal Act.

13. Childcare services relief.

14. Retirement benefits.

15. Remittance basis of assessment.

16. Deduction of tax under PAYE.

17. Limitation on amount of certain reliefs used by certain high income individuals.

Chapter 3

Income Tax, Corporation Tax and Capital Gains Tax

18. Amendment of section 481 (relief for investment in films) of Principal Act.

19. Amendment of section 659 (farming: allowances for capital expenditure on the construction of farm buildings etc., for control of pollution) of Principal Act.

20. Donation of designated securities to approved bodies.

21. Amendment of section 373 (interpretation (Part 11)) of Principal Act.

22. Amendment of Chapter 3 (income tax and corporation tax) of Part 7 (income tax and corporation tax exemptions) of Principal Act.

23. Amendment of Schedule 26A (donations to approved bodies, etc.) to Principal Act.

24. Amendment of section 817 (schemes to avoid liability to tax under Schedule F) of Principal Act.

25. Residential reliefs — various schemes.

26. Restriction of expenditure incurred on the construction and refurbishment of certain industrial and commercial buildings.

27. Capital allowances for hotels, holiday camps and holiday cottages.

28. Capital allowances for sports injuries clinics.

29. Capital allowances for multi-storey car parks.

30. Capital allowances for industrial and commercial premises in urban renewal areas and commercial premises on living over the shop streets.

31. Capital allowances for industrial and commercial premises in rural renewal areas.

32. Capital allowances for park and ride facilities and related commercial premises.

33. Capital allowances for industrial and commercial premises in town renewal areas.

34. Capital allowances for buildings used for third level educational purposes.

35. Capital allowances for qualifying private hospitals.

36. Capital allowances for qualifying mental health centres.

37. Capital allowances for convalescent homes, registered nursing homes and qualifying residential units.

38. Capital allowances for buildings used for certain childcare purposes.

39. Balancing charges for certain buildings and structures.

40. Amendment of section 812 (taxation of income deemed to arise from transfers of right to receive interest from securities) of Principal Act.

41. Amendment of Part 36A (special savings incentive accounts) of Principal Act.

42. Pensions: incentive tax credits.

43. Amendment of section 530 (interpretation (Chapter 2)) of Principal Act.

44. Amendment of section 531 (payments to subcontractors in certain industries) of Principal Act.

45. Common contractual funds.

46. Treatment of certain dividends.

47. Amendment of section 246 (interest payments by companies and to non-residents) of Principal Act.

48. Amendment of Chapter 5 (policyholders — new basis) of Part 26 of Principal Act, etc.

49. Amendment of Chapter 6 (certain foreign life policies — taxation and returns) of Part 26 of Principal Act.

50. Certain matters relating to investment undertakings in Chapter 1A of Part 27 of Principal Act.

51. Amendment of Chapter 4 (certain offshore funds — taxation and returns) of Part 27 of Principal Act.

52. Securitisation companies and money market funds.

53. Amendment of section 739G (taxation of unit holders in investment undertakings) of Principal Act.

54. Amendment of section 713 (investment income reserved for policyholders) of Principal Act.

55. Amendment of section 141 (distributions out of income from patent royalties) of Principal Act.

56. Amendment of Chapter 7 (special measures on discontinuance of, and change of basis for computation of profits or gains of, a trade or profession) of Part 4 of Principal Act.

57. Amendment of section 64 (interest on quoted Eurobonds) of Principal Act.

58. Amendment of section 407 (restriction on use of losses and capital allowances for qualifying shipping trade) of Principal Act.

59. Definition of assurance company.

Chapter 4

Corporation Tax

60. Implementation of Council Directive No. 2005/19/EC amending Directive 90/434/EEC concerning companies of different Member States, and certain other matters.

61. Generally accepted accounting standards.

62. Matching of foreign currency assets with certain foreign currency share capital.

63. Amendment of Schedule 24 (relief from income tax and corporation tax by means of credit in respect of foreign tax) to Principal Act.

64. Amendment of section 626B (exemption from tax in the case of gains on certain disposals of shares) of Principal Act.

65. Amendment of section 247 (relief to companies on loans applied in acquiring interest in other companies) of Principal Act.

66. Amendment of section 766 (tax credit for research and development expenditure) of Principal Act.

67. Tonnage tax.

68. Amendment of Chapter 4 (income tax and corporation tax: treatment of certain losses and certain capital allowances) of Part 12 of Principal Act.

69. Amendment of Schedule 4 (exemption of specified non-commercial State sponsored bodies from certain tax provisions) to Principal Act.

Chapter 5

Capital Gains Tax

70. Amendment of section 598 (disposals of business or farm on “retirement”) of Principal Act.

71. Amendment of section 599 (disposals within family of business or farm) of Principal Act.

72. Amendment of section 603A (disposal of site to child) of Principal Act.

73. Amendment of section 606 (disposals of work of art, etc., loaned for public display) of Principal Act.

74. Amendment of Schedule 15 (list of bodies for purposes of section 610) to Principal Act.

75. Amendment of Chapter 2 (capital gains tax) of Part 44 of Principal Act.

76. Amendment of section 588 (demutualisation of assurance companies) of Principal Act.

77. Amendment of Schedule 16 (building societies: change of status) to Principal Act.

PART 2

Excise

78. Amendment of section 75 (charging and rates) of Finance Act 2003.

79. Rates of mineral oil tax.

80. Amendment of section 94 (interpretation) of Finance Act 1999.

81. Relief for biofuel.

82. Amendment of penalties on summary conviction for certain excise offences.

83. Amendment of section 153 (regulations) of Finance Act 2001.

84. Amendment of section 81 (regulations) of Finance Act 2003.

85. Amendment of section 104 (regulations) of Finance Act 1999.

86. Amendment of section 8 (regulations) of Finance (Excise Duty on Tobacco Products) Act 1977.

87. Amendment of section 83 (regulations) of Finance Act 2005.

88. Remission or repayment in respect of vehicle registration tax on certain hybrid electric vehicles or certain flexible fuel vehicles.

89. Amendment of section 141 (regulations) of Finance Act 1992.

90. Amendment of section 67 (betting duty) of Finance Act 2002.

91. Payment of betting duty.

PART 3

Value-Added Tax

92. Interpretation (Part 3).

93. Amendment of section 1 (interpretation) of Principal Act.

94. Amendment of section 5 (supply of services) of Principal Act.

95. Amendment of section 8 (taxable persons) of Principal Act.

96. Amendment of section 10 (amount on which tax is chargeable) of Principal Act.

97. Amendment of section 11 (rates of tax) of Principal Act.

98. Amendment of section 12 (deduction for tax borne or paid) of Principal Act.

99. Amendment of section 32 (regulations) of Principal Act.

100. Amendment of First Schedule to Principal Act.

101. Amendment of Sixth Schedule to Principal Act.

PART 4

Stamp Duties

102. Interpretation (Part 4).

103. Amendment of section 1 (interpretation) of Principal Act.

104. Demutualisation of assurance companies.

105. Amendment of section 81A (further relief from stamp duty in respect of transfers to young trained farmers) of Principal Act.

106. Approved bodies.

107. Reconstructions or amalgamations of certain funds.

108. Courts Service.

109. Single farm payment entitlement.

110. Amendment of Part 8 (companies capital duty) of Principal Act.

111. Amendment of section 123B (cash, combined and debit cards) of Principal Act.

PART 5

Capital Acquisitions Tax

112. Interpretation (Part 5).

113. Amendment of section 6 (taxable gift) of Principal Act.

114. Amendment of section 11 (taxable inheritance) of Principal Act.

115. Amendment of section 77 (exemption of heritage property) of Principal Act.

116. Amendment of Chapter 3 (annual levy on discretionary trusts) of Part 3 of Principal Act.

117. Discretionary trusts: returns.

118. Amendment of Part 10 (reliefs) of Principal Act.

119. Amendment of section 104 (allowance for capital gains tax on the same event) of Principal Act.

PART 6

Miscellaneous

120. Interpretation (Part 6).

121. Amendment of section 1003 (payment of tax by means of donation of heritage items) of Principal Act.

122. Payment of tax by means of donation of heritage property to an Irish heritage trust.

123. Prescribing of forms, etc.

124. Amendment of Chapter 3A (implementation of Council Directive 2003/48/EC of 3 June 2003 on Taxation of Savings Income in the Form of Interest Payments and Related Matters) of Part 38 of Principal Act.

125. Amendment of Chapter 3 (other obligations and returns) of Part 38 of Principal Act.

126. Transactions to avoid liability to tax: surcharge, interest and protective notifications.

127. Miscellaneous technical amendments in relation to tax.

128. Capital Services Redemption Account.

129. Care and management of taxes and duties.

130. Short title, construction and commencement.

SCHEDULE 1

Amendments Consequential on Changes in Personal Tax Credits

SCHEDULE 2

Miscellaneous Technical Amendments in Relation to Tax

Acts Referred to

Number 6 of 2006

FINANCE ACT 2006

BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

PART 1

Income Tax, Corporation Tax and Capital Gains Tax

Chapter 1

Interpretation

1 .— In this Part “Principal Act” means the Taxes Consolidation Act 1997 .

Chapter 2

Income Tax

2 .— As respects the year of assessment 2006 and subsequent years of assessment, section 15 of the Principal Act is amended—

(a) by substituting “€23,000” for “€20,400” (inserted by the Finance Act 2005 ) in subsection (3), and

(b) by substituting the following Table for the Table (as so inserted) to that section:

“TABLE

PART 1

PART 2

PART 3

”.

3 .— (1) Where an individual is entitled under a provision of the Principal Act mentioned in column (1) of the Table to this subsection to have the income tax to be charged on the individual, other than in accordance with the provisions of section 16(2) of the Principal Act, reduced for the year of assessment 2006 or any subsequent year of assessment and the amount of the reduction would, but for this section, be an amount which is the lesser of—

(a) the amount specified in column (2) of that Table, and

(b) the amount which reduces that liability to nil,

the amount of the reduction in accordance with paragraph (a) shall be the amount of the tax credit specified in column (3) of the Table.

TABLE

(2) Section 3 (as amended by the Finance Act 2005 ) of the Finance Act 2002 shall have effect subject to the provisions of this section.

(3) Schedule 1 shall apply for the purposes of supplementing subsection (1).

4 .— As respects the year of assessment 2006 and subsequent years of assessment, section 188 of the Principal Act is amended, in subsection (2), by substituting “€34,000” for “€33,000” (inserted by the Finance Act 2005 ) and “€17,000” for “€16,500” (as so inserted).

5 .— As respects the year of assessment 2006 and subsequent years of assessment, section 467 of the Principal Act is amended by substituting “€50,000” for “€30,000” (inserted by the Finance Act 2002 ) in both places where it occurs.

6 .— As respects the year of assessment 2006 and subsequent years of assessment, section 472C of the Principal Act is amended, in subsection (1), by substituting “€300” for “€200” (inserted by the Finance Act 2004 ) in the definition of “specified amount”.

7 .— Section 473 of the Principal Act is amended, as respects the year of assessment 2006 and subsequent years of assessment, by the substitution in subsection (1) of the following definition for the definition of “specified limit” (inserted by the Finance Act 2005 ):

“ ‘ specified limit ’, in relation to an individual for a year of assessment, means—

(a) in the case of—

(i) a married person assessed to tax in accordance with section 1017, or

(ii) a widowed person,

€3,300 but, if at any time during the year of assessment the individual was of the age of 55 years or over, ‘specified limit’ means €6,600, and

(b) in any other case, €1,650; but, if at any time during the year of assessment the individual was of the age of 55 years or over, ‘specified limit’ means €3,300;”.

8 .— The Principal Act is amended by substituting, as respects the year of assessment 2006 and subsequent years of assessment, the following for section 477:

“477.— (1) In this section—

‘ appropriate percentage ’, in relation to a year of assessment, means a percentage equal to the standard rate of tax for that year;

‘ claimant ’ has the meaning assigned to it by subsection (2);

‘ financial year ’, in relation to any year, means the period of 12 months ending on 31 December in that year;

‘ group water supply scheme ’ means a scheme referred to in the Housing (Improvement Grants) Regulations 1983 (S.I. No. 330 of 1983);

‘ service ’ means the provision by or on behalf of a local authority of—

(a) a supply of water for domestic purposes,

(b) domestic refuse collection or disposal, or

(c) domestic sewage disposal facilities;

‘ service charge ’ means a charge imposed under—

(a) the Local Government (Financial Provisions) (No. 2) Act 1983 , or

(b) section 65A (inserted by the Local Government (Sanitary Services) Act 1962 , and amended by the Local Government (Financial Provisions) (No. 2) Act 1983 ) of the Public Health (Ireland) Act 1878,

in respect of the provision by a local authority of any service or services;

‘specified amount’ , in relation to a claimant, means the lesser of—

(a) the amount proved to have been paid in the financial year immediately before the year of assessment in respect of service charges, or

(b) €400,

but if, in respect of the financial year ended on 31 December 2005 a claimant proves that he or she paid an amount greater than €400 by way of a fixed annual charge, then, in relation to that claimant, the specified amount for the year of assessment 2006 shall mean the amount proved to have been so paid.

(2) Where in relation to income tax for a year of assessment an individual (in this section referred to as a ‘claimant’) proves that in the financial year immediately before the year of assessment he or she has paid service charges for that financial year, the income tax to be charged on the claimant for that year of assessment, other than in accordance with section 16(2), shall, subject to subsection (3), be reduced by an amount which is the lesser of—

(a) the amount equal to the appropriate percentage of the specified amount, and

(b) the amount which reduces that income tax to nil.

(3) (a) In the case of a claimant assessed to tax for the year of assessment in accordance with section 1017, any payments made by the spouse of the claimant, in respect of which that spouse would have been entitled to relief under this section if the spouse were assessed to tax for the year of assessment in accordance with section 1016 (apart from subsection (2) of that section), shall be deemed to have been made by the claimant.

(b) In the case of an individual who resides on a full-time basis in the premises to which the service charges relate and pays such service charges on behalf of the claimant, that claimant may disclaim the relief provided by this section in favour of the individual, and such disclaimer shall be in such form as the Revenue Commissioners may require.

(4) Where the service consists of the provision of domestic refuse collection or disposal, is provided and charged for by a person or body of persons other than a local authority, and where such person or body of persons has—

(a) notified its provision to the local authority in whose functional area such service is provided, and

(b) furnished to that local authority such information as the local authority may from time to time request concerning that person or body of persons or the service provided by that person or body of persons,

the service provided shall be deemed for the purposes of this section as having been provided on behalf of the local authority and a payment in respect of such service shall be deemed a payment in respect of service charges.

(5) The provision of a supply of water for domestic purposes effected by a group water supply scheme shall be treated for the purposes of this section as if it were provided on behalf of a local authority, and a payment by an individual member of such a scheme in respect of such provision shall be deemed to be a payment in respect of service charges.

(6) Where a person makes a claim for relief under this section they shall, when requested by the Revenue Commissioners, indicate the name of the local authority, or person referred to in subsection (4) who provides the service on behalf of a local authority, and whether the charge consists of either or both of—

(a) a charge which is a fixed annual charge, or

(b) a charge determined by other means.

(7) Any deduction made under this section shall be in substitution for and not in addition to any deduction to which the individual might be entitled in respect of the same payment under any other provision of the Income Tax Acts.”.

9 .— Section 248 of the Principal Act is amended—

(a) in subsection (1)(a), by substituting, as respects a loan which is made after 7 December 2005, the following for subparagraph (i):

“(i) a company which exists wholly or mainly for the purpose of carrying on a trade or trades, or”,

and

(b) by inserting the following after subsection (1):

“(1A) Subsection (1)(c) shall not apply to a loan made after 7 December 2005 which is applied in paying off another loan applied in acquiring ordinary share capital in, or making a loan to, a company whose income consists wholly or mainly of profits or gains chargeable under Case V of Schedule D unless—

(a) the loan does not exceed the balance outstanding on, and

(b) the term of the loan does not exceed the balance of the term of,

the loan being paid off.”.

10 .— (1) Schedule 13 to the Principal Act is amended by inserting the following after paragraph 153 (inserted by the Finance Act 2005 )—

“154. National Council for Special Education.

155. National Library of Ireland.

156. An Education Support Centre established under section 37 of the Education Act 1998 .

157. Irish Health Services Accreditation Board.”.

(2) Subsection (1) comes into operation on 1 May 2006.

11 .— (1) The Principal Act is amended—

(a) in section 97 by inserting the following after subsection (2H) (inserted by Finance Act 2003):

“(2I) (a) Notwithstanding subsection (2), a deduction shall not be authorised by paragraph (e) of that subsection by reference to interest payable for a chargeable period (within the meaning of section 321) on borrowed money employed in the purchase, improvement or repair of a rented residential premises unless the person chargeable can show that the registration requirements of Part 7 of the Residential Tenancies Act 2004 have been complied with in respect of all tenancies which existed in relation to that premises in that chargeable period.

(b) For the purposes of paragraph (a), a written communication from the Private Residential Tenancies Board to the chargeable person confirming the registration of a tenancy, relating to a rented residential premises to which paragraph (a) applies, shall be accepted as evidence that the registration requirement in respect of that tenancy (and that tenancy only) has been complied with.”,

and

(b) in section 372AM(10), as respects claims for a deduction under section 372AP for a chargeable period in relation to a special qualifying premises—

(i) in paragraph (a) by substituting the following for subparagraph (iii):

“(iii) Part 7 of the Residential Tenancies Act 2004 in respect of all tenancies relating to that premises.”,

and

(ii) by inserting the following after paragraph (a)—

“(aa) For the purposes of paragraph (a)(iii) a written communication from the Private Residential Tenancies Board to the chargeable person confirming the registration of a tenancy relating to a special qualifying premises shall be accepted as evidence that the registration requirement in respect of that tenancy (and that tenancy only) has been complied with.”.

(2) Subsection (1) applies as respects chargeable periods, being—

(a) where the chargeable period is a year of assessment, the year of assessment 2006 and subsequent years, and

(b) where the chargeable period is an accounting period of a company, for accounting periods beginning on or after 1 January 2006.

12 .— (1) Section 664 of the Principal Act is amended—

(a) in subsection (1)(a) in the definition of “the specified amount”—

(i) in subparagraph (ii)(V)(B) by deleting “or” where it last occurs, and

(ii) by substituting the following for subparagraph (ii)(VI):

“(VI) in the period beginning on 1 January 2004 and ending on 31 December 2005—

(A) €10,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(B) €7,500, in any other case,

or

(VII) on or after 1 January 2006—

(A) €15,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(B) €12,000, in any other case,”,

(b) in subsection (1)(b) by substituting the following for subparagraph (iv):

“(iv) from a qualifying lease or qualifying leases made in the period beginning on 1 January 2004, and ending on 31 December 2005, and from a qualifying lease made before 1 January 2004, the specified amount shall not exceed—

(I) €10,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(II) €7,500, in any other case;

(v) from a qualifying lease or qualifying leases made on or after 1 January 2006, and from a qualifying lease made at any other time, the specified amount shall not exceed—

(I) €15,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(II) €12,000, in any other case.”,

and

(c) by inserting the following after subsection (6):

“(7) Notwithstanding any other provisions of the Tax Acts, for the purposes of determining the amount of any relief to be granted under this section, any payment received by the lessor, relating to the leasing of farm land under a qualifying lease, which is in consequence of the receipt or the expected receipt by the lessee of a payment relating to that farm land under the EU Single Payment Scheme operated by the Department of Agriculture and Food under Council Regulation (EC) No. 1782/2003 of 29 September 2003 ¹ , will be treated as rent from farm land.”.

(2) Subsection (1)(c) applies and has effect as on and from 1 January 2005.

13 .— Chapter 1 of Part 7 of the Principal Act is amended by inserting the following after section 216B:

“216C.— (1) In this section—

‘ childcare services ’ means any form of childminding services or supervised activities to care for minors, whether or not provided on a regular basis;

‘ qualifying residence ’, in relation to an individual for a year of assessment, means a residential premises situated in the State which is occupied by the individual as his or her sole or main residence during the year of assessment and in which at any time in the year of assessment childcare services are provided to not more than 3 minors, excluding minors occupying the residential premises as their sole or main residence;

‘ relevant sums ’ means all sums arising in respect of the use for the purposes of the provision of childcare services other than sums arising from the provision of such services to minors, any of whom is or are—

(a) the child or children of the individual providing those services, or

(b) occupying the qualifying residence as his or her sole or main residence,

of a room or rooms in a qualifying residence and includes sums arising in respect of meals, cleaning, laundry and other similar goods and services which are incidentally supplied in connection with that use;

‘ residential premises ’ means a building or part of a building used as a dwelling.

(2) (a) Subject to subsection (3)(a), this subsection applies if—

(i) relevant sums, chargeable to income tax under Case I or Case IV of Schedule D, arise to an individual (regardless of whether the relevant sums are chargeable to income tax under Case I or Case IV or under both Case I and Case IV), and

(ii) the amount of the relevant sums does not exceed the individual’s limit for the year of assessment.

(b) In ascertaining the amount of relevant sums for the purposes of this subsection no deduction shall be made in respect of expenses or any other matter.

(c) Where this subsection applies the following shall be treated as nil for the purposes of the Income Tax Acts—

(i) the profits or gains of the year of assessment, and

(ii) the losses of any such year of assessment,

in respect of relevant sums arising to an individual.

(d) Where an individual has relevant sums chargeable to income tax under Case I of Schedule D and an election under subsection (3)(a) has been made, an allowance under section 284, which would on due claim being made be granted, shall be deemed to have been granted.

(3) (a) Subsection (2) shall apply for a year of assessment if an individual so elects by notice in writing to the inspector on or before the specified return date for the chargeable period (within the meaning of section 950) and shows to the satisfaction of the Revenue Commissioners evidence that the individual has notified the person, recognised by the Health Service Executive for the purposes of such notification, that childcare services are being, will be or have been provided by the individual in the year of assessment.

(b) An election under this subsection shall have effect only for the year of assessment for which it is made.

(4) The provisions of the Income Tax Acts relating to the making of returns shall apply as if this section had not been enacted.

(5) Subject to subsection (6), the individual’s limit referred to in subsection (2) is €10,000.

(6) Where relevant sums arise to more than one individual in respect of a qualifying residence the limit referred to in subsection (5) shall be divided by the number of such individuals.

(7) Where subsection (2) applies, the receipt of relevant sums shall not operate so as to restrict or reduce any entitlement to relief under section 244 or 604.”.

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

(a) in Chapter 1 of Part 30—

(i) in section 772—

(I) in subsection (2)(c) by substituting “by this Chapter and Chapter 2C” for “by this Chapter”, and

(II) by inserting the following after subsection (3E):

“(3F) A retirement benefits scheme shall neither cease to be an approved scheme nor shall the Revenue Commissioners be prevented from approving a retirement benefits scheme for the purposes of this Chapter because of any provision in the rules of the scheme whereby a member’s entitlement under the scheme may be commuted, to such extent as may be necessary, for the purpose of discharging a tax liability in connection with that entitlement under the provisions of Chapter 2C of this Part.”,

(ii) in section 774(7)(c)—

(I) by deleting subparagraphs (iii) and (iv), and

(II) by inserting the following after subparagraph (ii):

“(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 year of assessment was of the age of 60 years or over, 40 per cent, and

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

(iii) in section 776(2)(c)—

(I) by deleting subparagraphs (iii) and (iv), and

(II) by inserting the following after subparagraph (ii):

“(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 year of assessment was of the age of 60 years or over, 40 per cent, and

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

and

(iv) by inserting the following after section 779—

“Transactions deemed to be pensions in payment.

779A.— (1) Where the assets of a retirement benefits scheme, which is approved, or is being considered for approval, under this Chapter (in this section referred to as the ‘scheme’), are used in connection with any transaction which would, if the assets were the assets of an approved retirement fund, be regarded under section 784A as giving rise to a distribution for the purposes of that section, the use of the assets shall be regarded as a pension paid under the scheme and the amount so regarded shall be calculated in accordance with that section.

(2) An amount which has been regarded as a pension paid under the scheme, in accordance with this section, shall not be regarded as an asset in the scheme for any purpose.

(3) Any property, the acquisition or sale of which is regarded as giving rise to a pension payment under the scheme, shall not be regarded as an asset of the scheme.”,

(b) in Chapter 2 of Part 30—

(i) in section 783(1)(a) by inserting the following after the definition of “director”:

“ ‘ earnings limit ’ shall be construed in accordance with section 790A;”,

(ii) in section 784—

(I) by inserting the following after subsection (2C):

“(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.”,

and

(II) in subsection (4A) by substituting “by this section or, as the case may be, by section 785 and by Chapter 2C” for “by this section or, as the case may be, by section 785”,

(iii) in section 784A—

(I) in subsection (1B)—

(A) by deleting “and” at the end of paragraph (e),

(B) in paragraph (f) by substituting “acquisition, and” for “acquisition.”, and

(C) by adding the following after paragraph (f):

“(g) in the case of the acquisition of property which is to be used in connection with any business of the individual beneficiallyentitled to the assets in theapproved retirement fund or in connection with any business of 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 2 February 2006, 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 the purpose mentioned in 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.”,

(II) by inserting the following after subsection (1B):

“(1BA) (a) In this subsection the relevant rate per cent in relation to a year of assessment means—

(i) for the year of assessment 2007, 1 per cent,

(ii) for the year of assessment 2008, 2 per cent, and

(iii) for the year of assessment 2009 and following years of assessment, 3 per cent.

(b) Subject to the provisions of this subsection, for the purposes of this section the specified amount referred to in paragraph (c) shall be regarded as a distribution of that amount made in the first month of the year of assessment following the year of assessment in respect of which the specified amount is determined.

(c) The specified amount for a year of assessment shall be an amount equivalent to the amount determined by the formula—

(A x B) – C

100

where the amount so determined is greater than zero and where—

A is the value of the assets in an approved retirement fund on 31 December in the year of assessment or, where there is more than one approved retirement fund the assets of which are beneficially owned by the same individual and managed by the same qualifying fund manager, the aggregate of the values of the assets in each approved retirement fund on that date (in this subsection referred to as the ‘relevant value’ whether there is one or more than one such approved retirement fund),

B is the relevant rate per cent for the year of assessment, and

C is the amount or value of the distribution or the aggregate of the amounts or values of the distribution or distributions (in this subsection referred to as the ‘relevant distribution’), if any, made during the year of assessment by the qualifying fund manager in respect of assets held in—

(i) the approved retirement fund or, as the case may be, approved retirement funds referred to in the meaning of ‘A’, and

(ii) an approved minimum retirement fund, if any, the assets of which are beneficially owned by the individual and managed by that qualifying fund manager,

(in this paragraph referred to as ‘the funds’) being funds the assets in which were first accepted into the funds by the qualifying fund manager on or after 6 April 2000.

(d) For the purposes of paragraph (c) the relevant distribution shall not include—

(i) a specified amount, if any, regarded as a distribution under paragraph (b),

(ii) a transaction referred to in subsection (1B) which is regarded as a distribution under subsection (1A), of the amount specified in subsection (1B), or

(iii) a transfer referred to in section 784C(5)(a).

(e) Where an individual is the beneficial owner of the assets in more than one approved retirement fund and the qualifying fund manager of each of those funds is not the same person, the individual may appoint one of the qualifying fund managers (in this subsection referred to as the ‘nominee’) for the purposes of this subsection and where a nominee is so appointed the individual, in relation to the other qualifying fund manager or, as the case may be, the other qualifying fund managers (referred to in this paragraph as the ‘other manager or managers’) shall—

(i) inform the other manager or managers of such appointment for the purposes of this subsection, and

(ii) provide the other manager or managers with the full name and address of the nominee.

(f) Where an individual appoints a nominee in accordance with paragraph (e)—

(i) the other qualifying fund manager or each of the other qualifying fund managers shall, within 14 days of the end of the year of assessment, provide the nominee with a certificate for that year of assessment stating—

(I) the relevant value, and

(II) the relevant distribution,

in respect of the approved retirement fund, or as the case may be, approved retirement funds managed by that other qualifying fund manager, and

(ii) the person so appointed as nominee shall keep and retain for a period of 6 years each such certificate so provided and on being so required by notice given to it in writing by an officer of the Revenue Commissioners, make available to the officer within the time specified in the notice, such certificates as may be required by the said notice.

(g) Where an individual appoints a nominee in accordance with paragraph (e) and the nominee receives a certificate, or as the case may be certificates, which has or have been provided in accordance with paragraph (f), the specified amount shall be determined as if the relevant value and the relevant distribution stated in each certificate so received were, respectively, to be added to and included in the relevant value in respect of approved retirement funds managed by the nominee and to be added to and included in the relevant distribution by the nominee in that year of assessment.

(h) Where—

(i) an individual to whom paragraph (e) applies appoints a nominee as provided for in that paragraph and there is only one other qualifying fund manager and the nominee does not receive a certificate referred to in paragraph (f) in respect of that qualifying fund manager, then the nominee and the other qualifying fund manager, or

(ii) paragraph (g) applies and the nominee does not receive a certificate referred to in paragraph (f) in respect of one or more of the other qualifying fund managers, then each such qualifying fund manager,

shall determine the specified amount in accordance with paragraph (c).

(i) This subsection applies—

(i) for any year of assessment in which the individual beneficially entitled to the assets in an approved retirement fund, or as the case may be, approved retirement funds was of the age of 60 years or over for the whole of that year of assessment, and

(ii) as regards an approved retirement fund where the assets in the fund were first accepted into the fund by the qualifying fund manager on or after 6 April 2000.”,

(III) in subsection (1C) by inserting “other than a specified amount referred to in subsection (1BA)(b),” after “in accordance with this section,”, and

(IV) in subsection (1E), by substituting “For the purposes of subsections (1B) and (1BA)” for “For the purposes of subsection (1B)”,

and

(iv) in section 787—

(I) in subsection (2A) by substituting “shall not exceed the earnings limit” for “shall not exceed €254,000”,

(II) in subsection (8) by deleting paragraphs (c) and (d), and

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

“(c) 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 or who for the year of assessment was a specified individual, 30 per cent,

(d) 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,

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

(f) in any other case, 15 per cent,”,

(c) in Chapter 2A of Part 30—

(i) in section 787A by inserting the following after the definition of “distribution”:

“ ‘ earnings limit ’ shall be construed in accordance with section 790A;”,

(ii) in section 787B(8) by substituting “shall not exceed the earnings limit” for “shall not exceed €254,000”,

(iii) in section 787E—

(I) in subsection (1)—

(A) by deleting paragraphs (c) and (d), and

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

“(c) 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 or who for the year of assessment was a specified individual, 30 per cent,

(d) 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,

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

(f) in any other case, 15 per cent,”,

and

(II) in subsection (3)(b)—

(A) by deleting subparagraphs (iii) and (iv), and

(B) by inserting the following after subparagraph (ii):

“(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 year of assessment was of the age of 60 years or over, 40 per cent, and

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

(iv) in section 787G—

(I) in subsection (3)—

(A) in paragraph (d)(ii) by substituting “or made available,” for “or made available.”, and

(B) by inserting the following after paragraph (d):

“(e) an amount referred to in section 787K(2A).”,

and

(II) in subsection (5) by substituting “by virtue of this Chapter and Chapter 2C” for “by virtue of this Chapter”,

and

(v) in section 787K by inserting the following after subsection (2):

“(2A) A PRSA product (within the meaning of Part X of the Pensions Act 1990 ) shall neither cease to be an approved product under section 94 of that Act nor shall the Revenue Commissioners be prevented from approving a product under that section notwithstanding that the product permits the PRSA administrator to make available from the PRSA assets, to such extent as may be necessary, an amount for the purpose of discharging a tax liability in relation to a PRSA contributor, under the provisions of Chapter 2C of this Part, in connection with a relevant payment to the PRSA contributor.”,

(d) in section 787N(1) by substituting “under the provisions of subsections (6), (7) and (8) of section 774 and section 778(1) of Chapter 1” for “under the provisions of section 774(6), 774(7) and 778(1) of Chapter 1”,

(e) by the insertion of the following after Chapter 2B—

“Chapter 2C

Limit on Tax-Relieved Pension Funds

Interpretation and general (Chapter 2C).

787O.— (1) In this Chapter and Schedule 23B, unless the context otherwise requires—

‘ administrator ’, in relation to a relevant pension arrangement, means the person or persons having the management of the arrangement, and includes—

(a) an administrator, within the meaning of section 770(1),

(b) a person mentioned in section 784, lawfully carrying on the business of granting annuities on human life, including the person mentioned in section 784(4A)(ii),

(c) a PRSA administrator, within the meaning of section 787A(1), and

(d) an administrator of a relevant pension arrangement of a kind described in paragraphs (e) and (f) of the definition of relevant pension arrangement, as may be specified by regulations under section 787U;

‘ amount crystallised by a benefit crystallis ation event ’ shall be construed in accordance with paragraph 3 of Schedule 23B and a reference to ‘amount of the current event’ shall be construed as the amount crystallised by the benefit crystallisation event which is that event;

‘ amount of uncrystallised pension rights on the specified date’ , in relation to an individual, shall be determined in accordance with paragraph 1 of Schedule 23B;

‘ annual amount of a pension’ means the amount of pension payable to the individual in the period of 12 months beginning with the day on which the individual becomes entitled to the pension and on the assumption that there is no increase in the pension throughout that period;

‘ approved retirement fund’ has the meaning assigned to it by section 784A;

‘approved minimum retirement fund ’ has the meaning assigned to it by section 784C;

‘ benefit crystallisation event’ and the time when such an event occurs shall be construed in accordance with paragraph 2 of Schedule 23B;

‘calculation A’ , in relation to the annual amount of a pension, means a calculation that increases that annual amount at an annual percentage rate of 5 per cent for the whole of the period beginning with the month in which the individual became entitled to the pension and ending with the month in which the individual becomes entitled to payment of the pension at an increased annual amount;

‘calculation B’ , in relation to the annual amount of a pension, means a calculation that increases that annual amount by 2 per cent plus the movement in the All Items Consumer Price Index Number compiled by the Central Statistics Office starting in the month in which the individual first became entitled to the pension and ending in the month when the individual becomes entitled to payment of the pension at an increased annual amount;

‘ chargeable excess’ shall be construed in accordance with section 787Q(4);

‘current event’ means a benefit crystallisation event occurring on or after the specified date;

‘ date of the current event’ means the date on which—

(a) the individual acquires an actual entitlement to the payment of a benefit in respect of the current event under the relevant pension arrangement, whether or not the benefit is paid on, or commences to be paid on, that date,

(b) the annuity or, as the case may be, the pension would otherwise become payable under a relevant pension arrangement where the individual exercises an option in accordance with section 772(3A), 784(2A) or, as the case may be, section 787H(1),

(c) a payment or transfer is made to an overseas arrangement by direction of the individual under the provisions of the Occupational Pension Schemes and Personal Retirement Savings Accounts (Overseas Transfer Payments) Regulations 2003 (S.I. No. 716 of 2003), or

(d) the individual, having become entitled to a pension under a relevant pension arrangement on or after the specified date, becomes entitled to the payment of that pension at an increased annual amount which exceeds by more than the permitted margin the annual amount at which it was payable on the date the individual became entitled to it;

‘ defined benefit arrangement ’ means a relevant pension arrangement other than a defined contribution arrangement;

‘defined contribution arrangement’ means a relevant pension arrangement that provides benefits calculated by reference to an amount available for the provision of benefits to or in respect of the member, whether the amount so available is determined solely by reference to the contributions paid into the arrangement by or on behalf of the member and the investment return earned on those contributions or otherwise, and includes a relevant pension arrangement of the kind described in paragraphs (b) and (c) of the definition of ‘relevant pension arrangement’;

‘ excepted circumstances ’ means circumstances such that the increase in the annual amount of pension in payment to the individual is directly related to an increase in the rate of remuneration of all persons or of a class of persons employed in the sector in which the individual was employed and in respect of which employment the individual is entitled to the pension under the relevant pension arrangement;

‘ market value ’ shall be construed in accordance with section 548;

‘ maximum tax-relieved pension fund’ , in relation to an individual, means the overall limit on the amount that may be crystallised by a benefit crystallisation event or, where there is more than one such event, the aggregate of all of such amounts on or after the specified date without giving rise to a chargeable excess;

‘ member’ , in relation to a relevant pension arrangement, means any individual who, having been admitted to membership under the rules of the arrangement, remains entitled to any benefit under the arrangement and includes an employee within the meaning of section 770(1), the individual referred to in section 784, a PRSA contributor within the meaning of Chapter 2A and a relevant migrant member within the meaning of section 787M(1);

‘ overseas arrangement’ means an arrangement for the provision of retirement benefits established outside the State;

‘ permitted margin’ means the amount by which the annual amount of the pension would be greater if it had been increased by whichever of calculation A and calculation B gives the greater amount;

‘ personal fund threshold’ , in relation to an individual for a year of assessment, means—

(a) for the years of assessment 2005 and 2006, the amount of the uncrystallised pension rights on the specified date in relation to the individual where the amount of those rights on that date exceed the standard fund threshold, and

(b) for a year of assessment (in this paragraph referred to as the ‘relevant year’) after the year of assessment 2006, an amount equivalent to the amount determined by the formula—

A x B

where—

A is the personal fund threshold for the year of assessment immediately preceding the relevant year, and

B is the earnings adjustment factor, to be designated in writing by the Minister for Finance in December of the year of assessment preceding the relevant year, a note of which shall be published as soon as practicable in the Iris Oifigiúil;

‘ previously used amount’ , in relation to the standard fund threshold or, as the case may be, the personal fund threshold shall be construed in accordance with paragraph 5 of Schedule 23B;

‘ PPS Number’ , in relation to an individual, means the individual’s Personal Public Service Number within the meaning of section 262 of the Social Welfare Consolidation Act 2005 ;

‘ relevant pension arrangement’ means—

(a) a retirement benefits scheme, within the meaning of section 771, for the time being approved by the Revenue Commissioners for the purposes of Chapter 1,

(b) an annuity contract or a trust scheme or part of a trust scheme for the time being approved by the Revenue Commissioners under section 784,

(c) a PRSA contract, within the meaning of section 787A, in respect of a PRSA product, within the meaning of that section,

(d) a qualifying overseas pension plan within the meaning of Chapter 2B,

(e) a public service pension scheme within the meaning of section 1 of the Public Service Superannuation (Miscellaneous Provisions) Act 2004 , or

(f) a statutory scheme, within the meaning of section 770(1), other than a public service pension scheme referred to in paragraph (e);

‘ relevant valuation factor’ has the meaning assigned to it by subsection (2);

‘ specified date’ means 7 December 2005;

‘ standard fund threshold ’, in relation to an individual for a year of assessment, means—

(a) for the years of assessment 2005 and 2006, €5,000,000, and

(b) for a year of assessment (in this paragraph referred to as the ‘relevant year’) after the year of assessment 2006, an amount equivalent to the amount determined by the formula—

A x B

where—

A is the standard fund threshold for the year of assessment immediately preceding the relevant year, and

B is the earnings adjustment factor, to be designated in writing by the Minister for Finance in December of the year of assessment preceding the relevant year, a note of which shall be published as soon as practicable in the Iris Oifigiúil;

‘ uncrystallised pension rights’ , in relation to an individual on any date, means pension rights in respect of which the individual was not entitled to the payment of benefits in relation to those rights on that date.

(2) (a) Subject to paragraph (b), for the purposes of this Chapter and Schedule 23B, the relevant valuation factor, in relation to a relevant pension arrangement, is 20.

(b) The administrator of a relevant pension arrangement may, with the prior agreement of the Revenue Commissioners, use a valuation factor (in this subsection referred to as the ‘first-mentioned factor’) other than the factor referred to in paragraph (a) (in this subsection referred to as the ‘second-mentioned factor’) where the Revenue Commissioners are satisfied that—

(i) the second-mentioned factor is clearly inappropriate, and

(ii) the first-mentioned factor would be appropriate,

to use in the circumstances.

(c) The Revenue Commissioners may appoint a person to advise them on—

(i) whether the second-mentioned factor is clearly inappropriate in the circumstances of a particular relevant pension arrangement, and

(ii) if it is clearly inappro-priate—

(I) whether the administrator of the relevant pension arrangement has satisfactorily demonstrated that a particular alternative factor would be appropriate to use in those circumstances, and

(II) if the administrator has not demonstrated that satisfactorily, what factor would be appropriate to use in the circumstances.

(d) An administrator of a relevant pension arrangement who is seeking the agreement of the Revenue Commissioners, referred to in paragraph (b), shall provide the Revenue Commissioners with all such information relevant to the consideration of the valuation factor to be used in the circumstances of that arrangement as the Commissioners may request.

(3) For the purposes of this Chapter, where more than one benefit crystallisation event occurs in relation to an individual on the same day, the individual shall decide the order in which they are to be deemed to occur.

(4) Schedule 23B shall apply for the purposes of supplementing this Chapter and shall be construed as one with this Chapter.

Maximum tax-relieved pension fund.

787P.— (1) An individual’s maximum tax-relieved pension fund shall not exceed—

(a) the standard fund threshold or,

(b) where the condition set out in subsection (2) is met and the Revenue Commissioners have issued a certificate in accordance with subsection (5), the personal fund threshold.

(2) The condition referred to in subsection (1)(b) is that the individual notifies the Revenue Commissioners in writing, within the period of 6 months from the specified date, or before the first benefit crystallisation event occurs after the specified date, whichever is the earlier, that he or she has a personal fund threshold and provides the following details—

(a) his or her full name, address and PPS Number,

(b) a schedule detailing the calculation of the personal fund threshold, including particulars of the relevant pension arrangement, or arrangements in respect of which the personal fund threshold arises, and

(c) such other information and particulars as the Revenue Commissioners may reasonably require for the purposes of this Chapter.

(3) A notification referred to in subsection (2) shall be in such form as may be prescribed or authorised by the Revenue Commissioners and shall include a declaration to the effect that the notification is correct and complete.

(4) An individual shall be taken to have satisfied the condition in subsection (2) notwithstanding that the notification (in this Chapter referred to as the ‘late notification’) has been made after the time limited by that subsection has elapsed if the Revenue Commissioners consider that, in all of the circumstances, the failure of the individual to meet the condition within the time limits specified in that subsection should be disregarded.

(5) The Revenue Commissioners on receipt of—

(a) a notification referred to in subsection (2), or

(b) a late notification referred to in subsection (4) in respect of which the Revenue Commissioners consider that, in all of the circumstances, the failure of the individual to meet the condition within the time limits specified in subsection (2) should be disregarded,

shall, on being satisfied that the calculation of the personal fund threshold contained in the notification or, as the case may be, the late notification is correct, and within 30 days of receipt of the said notification, or such longer time as they may require for the purposes of this subsection, issue a certificate to the individual stating the amount of the personal fund threshold.

Chargeable excess.

787Q.— (1) Income tax shall be charged in accordance with section 787R where, on or after the specified date, a benefit crystallisation event occurs (in this section referred to as the ‘current event’) in relation to an individual who is a member of a relevant pension arrangement and either of the conditions in subsection (2) are met.

(2) The conditions referred to in subsection (1) are—

(a) that all or any part of the individual’s standard fund threshold or, as the case may be, personal fund threshold is available at the date of the current event but the amount of that event exceeds the amount of the standard fund threshold or personal fund threshold which is available at that date, or

(b) that none of the individual’s standard fund threshold or personal fund threshold, as the case may be, is available at the date of the current event.

(3) For the purposes of subsection (2), the amount of an individual’s standard fund threshold or, as the case may be, personal fund threshold that is available at the date of the current event shall be determined in accordance with paragraph 4 of Schedule 23B.

(4) Subject to subsection (5), where either of the conditions in subsection (2) are met, the amount of the current event or, as the case may be, the amount by which the amount of that event exceeds the amount of the standard fund threshold or personal fund threshold that is available at that date in relation to the individual, shall be known as the ‘chargeable excess’.

(5) Where the amount of tax arising on a chargeable excess in accordance with section 787R is paid by the administrator of a relevant pension arrangement in whole or in part, then so much of the tax that is paid by the administrator shall itself be treated as forming part of the chargeable excess unless the individual’s rights under the relevant pension arrangement are reduced so as to fully reflect the amount of tax so paid or the administrator is reimbursed by the individual in respect of any tax so paid.

(6) Where the administrator of a relevant pension arrangement, of a kind described in paragraphs (e) and (f) of the definition of relevant pension arrangement in section 787O(1), pays an amount of tax arising on a chargeable excess in accordance with section 787S(3), then—

(a) the amount of tax so paid shall be a debt due to the administrator from the individual or, where the individual is deceased, from his or her estate, and

(b) the administrator may appropriate all or part of the individual’s entitlements under that relevant pension arrangement, and the individual shall allow such appropriation, for the purposes of reimbursing the administrator in respect of the tax so paid.

Liability to tax and rate of tax on chargeable excess.

787R.— (1) Without prejudice to any other provisions of the Tax Acts including, in particular, any other provision of those Acts relating to a charge to tax—

(a) the whole of the amount of a chargeable excess calculated in accordance with section 787Q, without any relief or reduction specified in the Table to section 458 or any other deduction from that amount, shall be chargeable to income tax under Case IV of Schedule D at the rate of 42 per cent, and

(b) sections 187 and 188 shall not apply as regards income tax so charged.

(2) The persons liable for income tax charged under subsection (1) shall be—

(a) where the benefit crystallisation event giving rise to the chargeable excess occurs on or after the specified date but before the date of the passing of the Finance Act 2006, the individual in relation to whom the benefit crystallisation event occurs, and

(b) where the benefit crystallisation event giving rise to the chargeable excess occurs on or after the date of the passing of the Finance Act 2006, the administrator of the relevant pension arrangement under which the benefit crystallisation event arises and the individual in relation to whom the benefit crystallisation event occurs and their liability shall be joint and several.

(3) A person referred to in subsection (2) shall be liable for any income tax charged in accordance with subsection (1) whether or not that person, or any other person who is liable to the charge, is resident or ordinarily resident in the State.

(4) Where a benefit crystallisation event is due to occur (in this subsection referred to as the ‘future event’) in relation to an individual under a relevant pension arrangement on or after the date of the passing of the Finance Act 2006, the administrator of that arrangement may request the individual to make, before the date of the future event, a declaration in writing to the administrator, in such form as may be prescribed or authorised by the Revenue Commissioners for that purpose, which contains—

(a) the individual’s full name, address and PPS Number,

(b) in respect of each benefit crystallisation event that has occurred in relation to the individual on or after the specified date—

(i) the date on which that event occurred, and

(ii) the amount crystallised by that event,

(c) in respect of a benefit crystallisation event or benefit crystallisation events that is or are due to occur from the date of the declaration made by the individual under this subsection up to and including the date of the future event—

(i) the expected date of each such event, and

(ii) the estimated amount to be crystallised by each such event,

(d) where relevant, the amount of the individual’s personal fund threshold together with a copy of the certificate issued by the Revenue Commissioners under section 787P(5), and

(e) such other information as the Revenue Commissioners may reasonably require for the purposes of this Chapter.

(5) Where an individual has been requested to provide a declaration in writing to the administrator of a relevant pension arrangement in accordance with subsection (4) and fails to provide that declaration, the administrator may—

(a) where the benefit crystallisation event is an event of a kind described at subparagraph (a) or (d) of paragraph 2 of Schedule 23B, withhold the payment of any benefit or, as the case may be, any increased annual amount of pension, and

(b) where the benefit crystallisation event is an event of a kind described at subparagraph (b) or (c) of paragraph 2 of Schedule 23B, refuse to transfer an amount to the person, or any of the funds referred to in the said subparagraph (b) or, as the case may be, make a payment or transfer to an overseas arrangement,

until such time as a declaration in writing containing the information specified in paragraphs (a) to (e) of subsection (4) is provided to the administrator, in such form as may be prescribed or authorised by the Revenue Commissioners for the purposes of that subsection.

(6) An administrator of a relevant pension arrangement shall—

(a) keep and retain for a period of 6 years, and

(b) on being so required by notice given to the administrator in writing by an officer of the Revenue Commissioners, make available to the officer within the time specified in the notice,

a declaration, or declarations, of the kind mentioned in subsections (4) and (5).

Payment of tax due on chargeable excess.

787S.— (1) Where the person liable to income tax in accordance with section 787R is—

(a) the person referred to in paragraph (a) of subsection (2) of that section, that person shall, within 6 months of the specified date, make a return to the Collector-General which shall contain—

(i) his or her full name, address and PPS Number,

(ii) the full name and address of the administrator of the relevant pension arrangement or relevant pension arrangements (and if there is more than one such administrator, the full name and address of each of them) under which the benefit crystallisation event or events, referred to in subparagraph (iii), has or have occurred,

(iii) the amount of, and the basis of the calculation of, all chargeable excesses arising in respect of benefit crystallisation events occurring on or after the specified date but before the date of the passing of the Finance Act 2006, and

(iv) details of the amount of tax which that person is required to account for in relation to each chargeable excess,

or

(b) the administrator of a relevant pension arrangement referred to in section 787R(2)(b), the administrator shall within 3 months of the end of the month in which the benefit crystallisation event giving rise to the chargeable excess occurs, make a return to the Collector-General which shall contain—

(i) the name and address of the administrator,

(ii) the name, address and PPS Number of the individual in relation to whom the benefit crystallisation event has occurred,

(iii) details of the relevant pension arrangement under which the benefit crystallisation event giving rise to the chargeable excess has occurred,

(iv) the amount of, and the basis of calculation of, the chargeable excess arising in respect of the benefit crystallisation event, and

(v) details of the tax which the administrator is required to account for in relation to the chargeable excess.

(2) (a) An administrator of a relevant pension arrangement shall provide a statement to the Revenue Commissioners, in accordance with paragraph (b), within 2 months of the date of the passing of the Finance Act 2006, where, on or after the specified date but before the date of the passing of that Act, one or more benefit crystallisation events has or have occurred in relation to an individual under one or more relevant pension arrangements managed by that administrator, and the amount crystallised by that event or, as the case may be, the aggregate of the amounts crystallised by those events, exceeds €3,750,000.

(b) The statement referred to in paragraph (a) shall—

(i) be in such form as may be prescribed or authorised by the Revenue Commiss-ioners,

(ii) contain the following details—

(I) the full name, address and PPS Number of the individual in relation to whom the benefit crystallisation event or, as the case may be, the benefit crystallisation events, has or have occurred,

(II) details of the relevant pension arrangement or arrangements under which the benefit crystallisation event or events has or have occurred, and

(III) the amount crystallised by each such event,

and

(iii) include a declaration to the effect that the statement is correct and complete.

(3) The tax which a person is required to account for in relation to a chargeable excess (in this section referred to as the ‘appropriate tax’) and which is required to be included in a return shall be due at the time by which the return is due to be made and shall be paid by that person to the Collector-General. The appropriate tax so due shall be payable by that person without the making of an assessment; but appropriate tax that has become so due may be assessed on that person (whether or not it has been paid when the assessment is made) if that tax or any part of it is not paid on or before the due date.

(4) Where it appears to an officer of the Revenue Commissioners that there is any amount of appropriate tax in relation to a chargeable excess which ought to have been but has not been included in a return, or where the officer is dissatisfied with any return, then the officer may make an assessment on the person liable for the appropriate tax to the best of his or her judgement, and any amount of appropriate tax in relation to a chargeable excess due under an assessment made by virtue of this subsection shall be treated for the purposes of interest on unpaid tax as having been payable at the time by which the return concerned was due to be made.

(5) Where any item has been incorrectly included in a return as a chargeable excess, then an officer of the Revenue Commissioners may make such assessments, adjustments or set-offs as may in his or her judgement be required for securing that the resulting liabilities to tax, including interest on unpaid tax, whether of the administrator of a relevant pension arrangement or the individual, are, so far as possible, the same as they would have been if the item had not been so included.

(6) (a) Any appropriate tax assessed on a person under this Chapter shall be due within one month after the issue of the notice of assessment (unless that tax is due earlier under subsection (1)) subject to—

(i) any appeal against the assessment, or

(ii) any application under section 787T,

but no such appeal or application, as the case may be, shall affect the date when any amount is due under subsection (1).

(b) On the determination of an appeal against an assessment under this section, any appropriate tax overpaid shall be repaid.

(7) (a) The provisions of the Income Tax Acts relating to—

(i) assessments to income tax,

(ii) appeals against such assessments (including the rehearing of appeals and the statement of a case for the opinion of the High Court), and

(iii) the collection and recovery of income tax,

shall, in so far as they are applicable, apply to the assessment, collection and recovery of appropriate tax.

(b) Any amount of appropriate tax payable in accordance with this Chapter without the making of an assessment shall carry interest at the rate of 0.0273 per cent for each day or part of a day from the date when the amount becomes due and payable until payment.

(c) Subsections (3) to (5) of section 1080 shall apply in relation to interest payable under paragraph (b) as they apply in relation to interest payable under section 1080.

(d) In its application to any appropriate tax charged by any assessment made in accordance with this section, section 1080 shall apply as if subsection (2)(b) of that section were deleted.

(8) Every return referred to in this section shall be in a form prescribed or authorised by the Revenue Commissioners and shall include a declaration to the effect that the return is correct and complete.

Discharge of administrator from tax.

787T.— (1) Where the administrator of a relevant pension arrangement reasonably believed, in respect of a benefit crystallisation event, that—

(a) the benefit crystallisation event did not give rise to an income tax liability, or

(b) the amount of the income tax liability was less than the actual amount,

the administrator may apply to the Revenue Commissioners in writing to have that tax liability, or as the case may be, the amount of the difference between the amount which the administrator believed to be the amount of the tax liability and the actual amount (in this section referred to as the ‘relevant tax liability’) discharged.

(2) Where, following receipt of an application referred to in subsection (1), the Revenue Commissioners are of the opinion that in all of the circumstances it would not be just and reasonable for the administrator to be made liable to the relevant tax liability they may discharge the administrator from that liability and shall notify the administrator in writing of that decision.

(3) Without prejudice to any other circumstance in which an individual will be liable to discharge a tax liability due in respect of a chargeable excess, where an administrator of a relevant pension arrangement is discharged from a relevant tax liability in accordance with subsection (2), the individual in respect of whom the income tax charge arises shall become liable for the charge.

Regulations (Chapter 2C).

787U.— (1) The Revenue Commissioners may make regulations prescribing the procedure to be adopted in giving effect to this Chapter, in so far as such procedure is not otherwise provided for, and providing generally as to the administration of this Chapter, and without prejudice to the generality of the foregoing, regulations under this section may include provision for specifying, for the purposes of this Chapter, the person who shall be treated as the administrator of a relevant pension arrangement of a kind described in paragraphs (e) and (f) of the definition of relevant pension arrangement in section 787O(1).

(2) Every regulation made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the resolution is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.”,

and

(f) in Chapter 4 of Part 30—

(i) in section 790A—

(I) by renumbering the existing provision as subsection (1) of that section,

(II) by substituting the following for (d) in the renumbered provision:

“(d) Chapter 2B in respect of a contribution by a relevant migrant member to a qualifying overseas pension plan,”,

(III) by substituting “€254,000 (in this section referred to as the ‘earnings limit’).” for “€254,000.”, and

(IV) by inserting the following after subsection (1):

“(2) For a year of assessment (in this subsection referred to as the ‘relevant year’) after the year of assessment 2006 the earnings limit shall be increased by an amount equivalent to the amount determined by the formula—

A x B

where—

A is the earnings limit for the year of assessment immediately preceding the relevant year, and

B is the earnings adjustment factor, designated in writing by the Minister for Finance in December of the year of assessment preceding the relevant year, a note of which shall be published as soon as practicable in the Iris Oifigiúil.”,

and

(ii) by inserting the following after section 790A—

“Taxation of lump sum payments in excess of the lump sum limit.

790AA.— (1) (a) In this section—

‘ excess lump sum ’ has the meaning assigned to it by paragraph (e);

‘ lump sum limit’ , for a year of assessment, means—

(i) for the years of assessment 2005 and 2006, €1,250,000, and

(ii) for a year of assessment (in this paragraph referred to as the ‘relevant year’) after the year of assessment 2006, the amount equivalent to the amount determined by the formula—

SFT x 1

4

where SFT is the standard fund threshold, within the meaning of section 787O(1), for the relevant year;

‘ relevant pension arrangement ’ means any one or more of the following—

(i) a retirement benefits scheme, within the meaning of section 771, for the time being approved by the Revenue Commissioners for the purposes of Chapter 1,

(ii) an annuity contract or a trust scheme or part of a trust scheme for the time being approved by the Revenue Commissioners under section 784,

(iii) a PRSA contract, within the meaning of section 787A, in respect of a PRSA product, within the meaning of that section,

(iv) a qualifying overseas pension plan within the meaning of Chapter 2B,

(v) a public service pension scheme within the meaning of section 1 of the Public Service Superannuation (Miscellaneous Provisions) Act 2004 ,

(vi) a statutory scheme, within the meaning of section 770(1), other than a public service pension scheme referred to in paragraph (v);

‘ specified date ’ means 7 December 2005.

(b) In this section, ‘ administrator’ , in relation to a relevant pension arrangement, means the person or persons having the management of the arrangement, and in particular, but without prejudice to the generality of the foregoing, references to the administrator of a relevant pension arrangement include—

(i) an administrator, within the meaning of section 770(1),

(ii) a person mentioned in section 784, lawfully carrying on the business of granting annuities on human life, including the person mentioned in section 784(4A)(ii), and

(iii) a PRSA administrator, within the meaning of section 787A(1).

(c) (i) For the purposes of this section, a reference to a lump sum is a reference to a lump sum that is paid to an individual under the rules of a relevant pension arrangement by means of commutation of part of a pension or of part of an annuity or otherwise.

(ii) Without prejudice to the generality of subparagraph (i), the reference in that subparagraph to the commutation of part of a pension or of part of an annuity, shall, in a case where an individual opts in accordance with section 772(3A) or, as the case may be, section 784(2A), be construed as a reference to the commutation of part of the pension or, as the case may be, part of the annuity which would, but for the exercise of that option, be payable to the individual.

(d) For the purposes of this section, references to a lump sum that is paid to an individual include references to a lump sum that is obtained by, or given or made available to, an individual and references to a lump sum which was, or has, or had been paid to an individual shall be construed accordingly.

(e) For the purposes of this section, the excess lump sum, if any, in respect of a lump sum that is paid to an individual on or after the specified date (in this paragraph referred to as the ‘current lump sum’) shall be—

(i) where no other lump sum has been paid to the individual on or after the specified date, the amount by which the current lump sum exceeds the lump sum limit, and

(ii) where before the current lump sum was paid, one or more lump sums had been paid to an individual, on or after the specified date (in this paragraph referred to as the ‘earlier lump sum’), then—

(I) where the amount of the earlier lump sum is less than the lump sum limit, the amount by which the aggregate of the amounts of the earlier lump sum and the current lump sum exceeds the lump sum limit, and

(II) where the amount of the earlier lump sum is equal to or greater than the lump sum limit, the amount of the current lump sum.

(f) For the purposes of paragraph (e)—

(i) where—

(I) the current lump sum is paid in a year of assessment (in this subparagraph referred to as the ‘relevant year’) after the year of assessment 2006, and

(II) the earlier lump sum was paid before the relevant year,

then the amount of the earlier lump sum (and where the amount of the earlier lump sum is the aggregate of the amounts of 2 or more lump sums, then the amount of each of those lump sums) shall be adjusted to the amount equivalent to the amount determined by the formula—

A x B

C

where—

A is the amount of the earlier lump sum,

B is the lump sum limit for the relevant year, and

C is the lump sum limit for the year of assessment in which the earlier lump sum was paid,

and

(ii) (I) a lump sum (in this subparagraph referred to as the ‘first-mentioned lump sum’) shall be treated as paid before another lump sum (in this subparagraph referred to as the ‘second-mentioned lump sum’) if the first-mentioned lump sum is paid before the second-mentioned lump sum on the same day, and

(II) a lump sum shall not be treated as paid at the same time as one or more other lump sums and, where but for this subparagraph they would be so treated, the individual to whom the lump sums are paid shall decide on the order in which they are to be deemed to be paid.

(2) Subject to subsection (4)—

(a) where a lump sum is paid to an individual on or after the specified date, the excess lump sum, if any, shall be regarded as a payment to the individual of emoluments to which Schedule E applies, and, accordingly, the provisions of Chapter 4 of Part 42 shall apply to any such payment, and

(b) the administrator of a relevant pension arrangement shall deduct tax from the payment at the higher rate for the year of assessment in which the payment is made unless the administrator has received from the Revenue Commissioners a certificate of tax credits and standard rate cut-off point or a tax deduction card for that year in respect of the individual referred to in paragraph (a).

(3) Subsection (2) of section 787G shall apply in respect of any income tax, being income tax deducted from an excess lump sum by virtue of subsection (2) of this section, by an administrator of a relevant pension arrangement of a kind described in paragraph (iii) of the definition of relevant pension arrangement in subsection (1)(a), as it applies to income tax referred to in subsection (2) of section 787G.

(4) Where a lump sum is paid to an individual, on or after the specified date, under the rules of a relevant pension arrangement of a kind described in paragraph (iv) of the definition of relevant pension arrangement in subsection (1)(a), the excess lump sum, if any, shall be charged to tax under Case IV of Schedule D for the year of assessment in which the lump sum is paid to that individual.

(5) Subsections (2) and (4) shall not apply to a lump sum that is paid to a widow or widower, children, dependants or personal representatives of a deceased individual.

(6) Section 781 shall have effect notwithstanding the provisions of this section.”.

(2) The Principal Act is amended by the insertion after Schedule 23A of the following new Schedule:

“Part 30, Chapter 2C.

SCHEDULE 23B

Limit on Tax-Relieved Pension Funds

Calculation of the uncrystallised pension rights of an individual on the specified date

1. (1) For the purposes of Chapter 2C the amount of uncrystallised pension rights on the specified date in relation to an individual shall be the aggregate of the amounts of such rights on that date in respect of each of the relevant pension arrangements of which the individual is a member; but, where a benefit crystallisation event occurred in relation to the individual under a relevant pension arrangement on the specified date then it shall be deemed for the purposes of this paragraph to have occurred on the day following that date.

(2) Where a relevant pension arrangement referred to in subparagraph (1) is—

(a) a defined contribution arrangement, the individual’s uncrystallised pension rights under that arrangement shall be so much of the aggregate of—

(i) the amount of any cash sums, and

(ii) the market value of any other assets,

held for the purposes of the arrangement on the specified date as represent the individual’s rights under the arrangement,

(b) a defined benefit arrangement, the individual’s uncrystallised pension rights under that arrangement shall be an amount equivalent to the amount determined by the formula—

(RVF x AP) + LS

where—

RVF is the relevant valuation factor,

AP is the annual amount of the pension to which the individual would, on the valuation assumptions, be entitled under the arrangement on the specified date if, on that date, the individual acquired an actual rather than a prospective right to receive a pension in respect of the uncrystallised pension rights, and

LS is the amount of any lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement on the specified date (otherwise than by way of commutation of pension) if, on that date the individual acquired an actual rather than a prospective right to payment of a lump sum in respect of the rights.

(3) The valuation assumptions referred to in subparagraph (2)(b) are—

(a) if the individual has not reached such age, if any, as the individual is required to have reached under the relevant pension arrangement to avoid any reduction in the benefits on account of age, the assumption that the individual reached that age on the specified date, and

(b) the assumption that the individual’s right to receive the benefits under the relevant pension arrangement had not been occasioned by incapacity of mind or body.

Occurrence of benefit crystallisation event

2. For the purposes of Chapter 2C, a benefit crystallisation event, in relation to an individual, under a relevant pension arrangement of which the individual is a member shall occur where—

(a) the individual becomes entitled under the relevant pension arrangement to any one or more of the following benefits—

(i) a pension,

(ii) an annuity,

(iii) a lump sum,

(b) the individual exercises an option in accordance with section 772(3A), 784(2A) or 787H(1) for the transfer, on the date the annuity or, as the case may be, the pension would otherwise become payable, of an amount to any one or more of the following—

(i) the individual,

(ii) an approved retirement fund, or

(iii) an approved minimum retirement fund,

(c) a payment or transfer is made to an overseas arrangement by direction of the individual under the provisions of the Occupational Pension Schemes and Personal Retirement SavingsAccounts (Overseas Transfer Payments) Regulations 2003 (S.I. No. 716 of 2003),

(d) the individual, having become entitled to a pension under a relevant pension arrangement on or after the specified date, becomes entitled to the payment of that pension, other than in excepted circumstances, at an increased annual amount which exceeds by more than the permitted margin the annual amount at which it was payable on the day the individual became entitled to it.

Calculation of amount crystallised by a benefit crystallisation event

3. For the purposes of Chapter 2C, the amount crystallised by a benefit crystallisation event referred to in paragraph 2 shall be—

(a) where the benefit crystallisation event is an event of the kind referred to in paragraph 2(a)(i), an amount equivalent to the amount determined by the formula—

RVF x P

where—

RVF is the relevant valuation factor, and

P is the amount of pension which will be payable to the individual in the period of 12 months beginning with the day on which the individual becomes entitled to it and on the assumption that there is no increase in the pension throughout that period,

(b) where the benefit crystallisation event is an event of the kind referred to in paragraph 2(a)(ii), the aggregate of the amount of so much of the cash sums, and the market value of such of the other assets, representing the individual’s rights under the relevant pension arrangement, as are applied to purchase the annuity,

(c) where the benefit crystallisation event is an event of the kind referred to in paragraph 2(a)(iii), the amount of the lump sum paid to the individual,

(d) where the benefit crystallisation event is an event of a kind referred to in paragraph 2(b), the aggregate of the amount of so much of the cash sums and the market value of such of the assets as are to be transferred following the exercise of an option referred to in that paragraph,

(e) where the benefit crystallisation event is an event of the kind referred to in paragraph 2(c), the amount of the payment made, or as the case may be, the market value of the assets transferred, to an overseas arrangement in accordance with the provisions of the Occupational Pension Schemes and Personal Retirement Savings Accounts (Overseas Transfer Payments) Regulations 2003, and

(f) where the benefit crystallisation event is an event of the kind referred to in paragraph 2(d), an amount equivalent to the amount determined by the formula—

RVF x IP

where—

RVF is the relevant valuation factor, and

IP is the amount (in this assignment of meaning referred to as the ‘relevant amount’) by which the increased annual amount of the pension exceeds the annual amount at which it was payable on the day the individual became entitled to it, as increased by the permitted margin, but, if one or more benefit crystallisation events has or have previously occurred by reason of the individual having become entitled to payment of the pension at an increased annual amount, there shall be deducted from the relevant amount the amount crystallised by that event or the aggregate of the amounts crystallised by those events.

Amount of a standard fund threshold or personal fund threshold that is available at the date of a current event

4. For the purposes of Chapter 2C, the amount of the standard fund threshold or, as the case may be, personal fund threshold, for an individual, that is available at the date of the current event shall be determined as follows—

(a) if, prior to the current event, no benefit crystallisation event has occurred in relation to the individual on or after the specified date, the whole of the standard or personal fund threshold,

(b) if, prior to the current event, one or more benefit crystallisation events have occurred in relation to the individual on or after the specified date, and the previously used amount is equal to or greater than the amount of the individual’s standard fund threshold or, as the case may be, personal fund threshold, none of the standard fund threshold or the personal fund threshold, and

(c) in any other case, so much of the individual’s standard fund threshold or, as the case may be, personal fund threshold as is left after deducting the previously used amount.

Meaning of previously used amount

5. (1) For the purposes of paragraph 4 the previously used amount means—

(a) where one benefit crystallisation event has occurred in relation to the individual before the current event, the amount crystallised by the previous benefit crystallisation event adjusted in accordance with subparagraph (2), or

(b) where 2 or more benefit crystallisation events have occurred before the current event, the aggregate of the amounts crystallised by each previous crystallisation event each of those amounts having been adjusted in accordance with subparagraph (2).

(2) The adjustment referred to in subparagraph (1) is the amount crystallised by the previous benefit crystallisation event multiplied by—

A

B

where—

A is the standard fund threshold or, as the case may be, the personal fund threshold at the date of the current event, and

B is the standard fund threshold or, as the case may be, the personal fund threshold at the date of the previous benefit crystallisation event.”.

(3) Section 21(2)(c) of the Finance Act 2005 is amended with effect as on and from 3 February 2005 by substituting “in accordance with section 772(3A), 784(2A) or 787H(1) of the Principal Act” for “in accordance with subsection (2A) of section 784 of the Principal Act”.

(4) (a) Subject to paragraphs (b), (c) and (d), subsection (1) has effect as on and from 1 January 2006.

(b) Paragraphs (a)(iv) and (b)(iii)(I) of subsection (1) have effect as on and from 2 February 2006.

(c) Paragraph (d) of subsection (1) has effect as on and from 1 January 2005.

(d) Paragraphs (e) and (f)(ii) of subsection (1), and subsection (2), have effect as on and from 7 December 2005.

15 .— As respects the year of assessment 2006 and subsequent years of assessment, the Principal Act is amended, in subsection (2) of section 18, by substituting the following for paragraph (f) of Case III of Schedule D:

“(f) income arising from possessions outside the State except, in the case of income from an office or employment (including any amount which would be chargeable to tax in respect of any sum received or benefit derived from the office or employment if the profits or gains from the office or employment were chargeable to tax under Schedule E), so much of that income as is attributable to the performance in the State of the duties of that office or employment;”.

16 .— The Principal Act is, with effect from the passing of this Act, amended, in Chapter 4 of Part 42, by inserting, the following after section 985B (inserted by the Finance Act 2004 ):

“PAYE: payment by intermediary.

985C.— (1) Subject to subsection (2), where any payment of emoluments of an employee is made by an intermediary of the employer, the employer shall be treated, for the purposes of this Chapter and regulations made under this Chapter, as making a payment of such emoluments of an amount equal to the amount referred to in subsection (3).

(2) Subsection (1) does not apply if the intermediary deducts income tax from the payment to the employee and accounts for it in accordance with this Chapter and regulations made under this Chapter.

(3) The amount referred to in this subsection is—

(a) if the amount of the payment made by the intermediary is an amount to which the recipient is entitled after deduction of any income tax, the aggregate of the amount of that payment and the amount of any income tax due, and

(b) in any other case, the amount of the payment made by the intermediary.

(4) For the purposes of this section, a payment of emoluments of an employee is made by an intermediary of the employer if it is made—

(a) by a person acting on behalf of the employer and at the expense of the employer or a person connected (within the meaning of section 10) with the employer, or

(b) by trustees holding property for any persons who include, or class of persons which includes, the employee.

PAYE: employee of non-resident employer, etc.

985D.— (1) In this section and sections 985E and 985F, ‘work’, in relation to an employee, means the performance of any duties of the office or employment of the employee and any reference to the employee working shall be construed accordingly.

(2) This subsection applies where—

(a) an employee, during any period, works for a person (in this section referred to as the ‘relevant person’) who is not the employee’s employer,

(b) any payment of emoluments of the employee in respect of work done in that period is made by a person who is the employer or an intermediary of the employer or of the relevant person,

(c) the person making the payment or, if that person makes the payment as an intermediary of the employer or of the relevant person, the employer is not resident in the State, and

(d) income tax is not deducted or accounted for in accordance with this Chapter and regulations made under this Chapter, by the person making the payment or, if that person makes the payment as an intermediary of the employer or of the relevant person, the employer.

(3) Where subsection (2) applies, the relevant person shall be treated, for the purposes of this Chapter and regulations made under this Chapter, as making a payment of emoluments of the employee of an amount equal to the amount referred to in subsection (4).

(4) The amount referred to in this subsection is—

(a) if the amount of the payment, referred to in subsection (2), actually made is an amount to which the recipient is entitled after deduction of any income tax, the aggregate of the amount of that payment and the amount of any income tax due, and

(b) in any other case, the amount of that payment actually made.

(5) Where, by virtue of section 985A, an employer is treated for the purposes of this Chapter and regulations made under this Chapter as making a payment of any amount to an employee, this section shall have effect—

(a) as if the employer were treated for the purposes of this section as making an actual payment of that amount, and

(b) as if paragraph (a) of subsection (4) were omitted.

(6) For the purposes of this section, a payment of emoluments of an employee is made by an intermediary of the employer or of the relevant person if it is made—

(a) by a person acting on behalf of the employer or the relevant person and at the expense of the employer or the relevant person or a person connected (within the meaning of section 10) with the employer or the relevant person, or

(b) by trustees holding property for any persons who include, or class of persons which includes, the employee.

PAYE: employment not wholly exercised in State.

985E.— (1) (a) In this section ‘appropriate person’ means the person designated by the employer for the purposes of this section, and if no person is so designated, the employer.

(b) In this section any reference to a payment made by the employer includes a reference to a payment made by a person acting on behalf of the employer and at the expense of the employer or a person connected (within the meaning of section 10) with the employer.

(2) This section applies in relation to an employee in a year of assessment only if the employee works or will work in the State and also works or is likely to work outside the State.

(3) Where in relation to any year of assessment it appears to an officer of the Revenue Commissioners that—

(a) some of the income of an employee to whom this section applies is assessable to income tax under Schedule E, but

(b) an as yet unascertainable proportion of the income may prove not to be so assessable,

then the officer may, on an application made by the appropriate person, give a direction for determining a proportion of any payment made in that year of, or on account of, income of the employee which shall be treated for the purposes of this Chapter and regulations made under this Chapter as a payment of emoluments of the employee.

(4) An application for a direction under subsection (3) shall provide such information as is available and is relevant to the giving of the direction.

(5) A direction under subsection (3)—

(a) shall specify the employee to whom and the year of assessment to which it relates,

(b) shall be given by notice to the appropriate person, and

(c) may be withdrawn by notice to the appropriate person from a date specified in the notice.

(6) The date specified under subsection (5)(c) may not be earlier than 30 days from the date on which the notice of the withdrawal is given.

(7) Where—

(a) a direction under subsection (3) has effect in relation to an employee to whom this section applies, and

(b) a payment of, or on account of, the income of the employee is made in the year of assessment to which the direction relates,

then the proportion of the payment determined in accordance with the direction shall be treated for the purposes of this Chapter and regulations made under this Chapter as a payment of emoluments of the employee.

(8) Where in any year of assessment—

(a) no direction under subsection (3) has effect in relation to an employee to whom this section applies, and

(b) any payment is made of, or on account of, the income of the employee,

then the entire payment shall be treated for the purposes of this Chapter and regulations made under this Chapter as a payment of emoluments of the employee.

(9) Subsections (7) and (8) are without prejudice to—

(a) any assessment in respect of the income of the employee in question, and

(b) any right to repayment of income tax overpaid and any obligation to pay income tax underpaid.

(10) In a case where section 985D applies—

(a) the references to the employer in subsection (1)(a) include references to the relevant person (within the meaning of that section), and

(b) any reference to a payment made by the employer includes a reference to a payment treated, for the purposes of this Chapter and regulations made under this Chapter, as made by the relevant person.

PAYE: mobile workforce.

985F.— (1) This section applies where it appears to the Revenue Commissioners that—

(a) a person (in this section referred to as the ‘relevant person’) has entered into or is likely to enter into an agreement that employees of another person (in this section referred to as the ‘contractor’) shall in any period work for, but not as employees of, the relevant person,

(b) payments of emoluments of the employees in respect of work done in that period are likely to be made by or on behalf of the contractor, and

(c) this Chapter and regulations made under this Chapter would apply on the making of such payments but it is likely that income tax will not be deducted or accounted for in accordance with this Chapter and such regulations.

(2) Where this section applies, the Revenue Commissioners may give a direction that if—

(a) any employees of the contractor work in any period for, but not as employees of, the relevant person, and

(b) any payment is made by the relevant person in respect of work done by the employees in that period,

income tax shall be deducted in accordance with this section by the relevant person on making that payment.

(3) A direction under subsection (2)—

(a) shall specify the relevant person and the contractor to whom it relates,

(b) shall be given by notice to the relevant person, and

(c) may at any time be withdrawn by notice to the relevant person.

(4) The Revenue Commissioners shall take such steps as are reasonably practicable to ensure that the contractor is supplied with a copy of any notice given under subsection (3) which relates to the contractor.

(5) Where—

(a) a direction under subsection (2) has effect, and

(b) any employees of the contractor specified in the direction work for, but not as employees of, the relevant person so specified,

income tax shall, subject to and in accordance with this Chapter and regulations made under this Chapter, be deducted by the relevant person on making any payment in respect of that work as if so much of the payment as is attributable to work done by each employee were a payment of emoluments of that employee.”.

17 .— (1) The Principal Act is amended by inserting the following Chapter after Chapter 2 of Part 15:

“CHAPTER 2A

Limitation on amount of certain reliefs used by certain high income individuals.

Interpretation (Chapter 2A).

485C.— (1) In this Chapter and Schedule 25B, except where the context otherwise requires—

‘adjusted income’, in relation to a tax year and an individual, means the amount determined by the formula—

(T + S) – R

where—

T is the amount of the individual’s taxable income for the tax year determined on the basis that this Chapter, other than section 485F, does not apply to the individual for that year,

S is the aggregate of the specified reliefs for the tax year, and

R is the amount of the individual’s ring-fenced income, if any, for the tax year;

‘aggregate of the specified reliefs’, in relation to a tax year and an individual, means the aggregate of the amounts of specified reliefs used by the individual in respect of the tax year;

‘amount of specified relief’, in relation to a specified relief used by an individual in respect of a tax year, means the amount of the specified relief used by the individual in respect of the tax year determined by reference to the entry in column (3) of Schedule 25B opposite the reference to the specified relief concerned in column (2) of that Schedule;

‘excess relief’, in relation to a tax year and an individual, means the amount by which the individual’s taxable income for the tax year determined in accordance with section 485E exceeds the amount that the individual’s taxable income for the tax year would have been had this Chapter, other than section 485F, not applied to that individual for that year;

‘ring-fenced income’, in relation to a tax year and an individual, means the aggregate of the following amounts, if any, charged to tax on the individual for the tax year—

(a) income chargeable to tax in accordance with subparagraph (i) of paragraph (c) of section 261 where clause (II) of that subparagraph applies to the income concerned,

(b) income chargeable to tax in accordance with section 267M;

‘specified relief’, in relation to a tax year and an individual, means any of the reliefs set out in column (2) of Schedule 25B;

‘tax year’ means a year of assessment;

‘threshold amount’, in relation to a tax year and an individual, means—

(a) €250,000, or

(b) in a case where the individual’s income for the tax year includes ring-fenced income and his or her adjusted income for the tax year is less than €500,000, the amount determined by the formula—

€250,000 x A

B

where—

A is the individual’s adjusted income for the year, and

B is an amount determined by the formula—

T + S

where T and S have the same meanings respectively as they have in the definition of ‘adjusted income’.

(2) (a) For the purposes of this Chapter, references in this Chapter to specified reliefs used by the individual in respect of the tax year include references in the Tax Acts to—

(i) an allowance having been made to the individual for the year, in respect of which allowance, effect has been given, in full or in part, for that year,

(ii) a deduction having been given or allowed to the individual for the year, in respect of which deduction, effect has been given, in full or in part, for that year,

(iii) a deduction from or set off against income of whatever description being allowed to the individual for the year, in respect of which deduction or set off, effect has been given, in full or in part, for that year,

(iv) relief given to the individual for the year by way of repayment or discharge of tax in respect of which repayment or discharge effect has been given, in full or in part, for that year,

(v) income, profits or gains arising to the individual in the year being exempt from income tax for the year,

(vi) income, profits or gains arising to the individual in the year being disregarded or not reckoned for the purposes of the Income Tax Acts or, as the case may be, for the purposes of income tax for the year,

and other references in the Tax Acts to methods of affording relief from tax, however expressed, and in respect of which effect, in full or in part, has been given in the tax year shall likewise be construed as included in any reference in this Chapter to specified reliefs used by the individual in respect of the tax year.

(b) For the purposes of the definition of the ‘amount of specified relief’, in relation to a specified relief which is of a kind referred to in subparagraph (v) or (vi) of paragraph (a), the amount of any income, profits or gains, as the case may be, shall be computed in accordance with the Tax Acts as if the specified relief concerned had not been enacted.

(3) Notwithstanding any other provision of the Tax Acts, the following provisions shall apply for the purposes of those Acts—

(a) effect shall be given for a tax year in respect of a capital allowance which is not included in the aggregate of the specified reliefs in priority to any such allowance which is included in the aggregate of the specified reliefs,

(b) loss relief for any tax year shall be given in respect of a loss which is not referable to a specified relief in priority to relief being given for a loss which is referable to a specified relief,

(c) a further deduction due under section 324, 333, 345, 354 or paragraph 13 of Schedule 32 for a tax year shall only be given effect for that year after effect is given to any other deduction the individual is entitled to for that year in computing the amount of the individual’s profits or gains to be charged to tax for that year under Case I or II of Schedule D.

(4) Schedule 25B shall have effect for the purposes of this Chapter.

Application (Chapter 2A).

485D.— This Chapter shall apply to an individual for a tax year where—

(a) the individual’s adjusted income for the tax year is equal to or greater than the threshold amount, and

(b) the aggregate of the specified reliefs used by the individual in the tax year is equal to or greater than the threshold amount,

but this Chapter, other than section 485F, shall not apply for the tax year where one-half of the individual’s adjusted income for the tax year is equal to or greater than the aggregate of the specified reliefs used by the individual in respect of the tax year.

Recalculation of taxable income for purposes of limiting reliefs.

485E.— Where this Chapter applies to an individual for a tax year, notwithstanding anything in any provision of the Tax Acts other than this Chapter, the individual’s taxable income for the tax year shall, instead of being the amount it would have been had this Chapter not applied to the individual for the tax year, be the amount determined by the formula—

T + (S – Y)

where—

T is the amount of the individual’s taxable income for the tax year determined on the basis that this Chapter, other than section 485F, does not apply to the individual for the tax year,

S is the aggregate of the specified reliefs for the tax year, and

Y is the greater of—

(i) the threshold amount, and

(ii) one-half of the individual’s adjusted income for the tax year.

Carry forward of excess relief.

485F.— (1) Where in any tax year section 485E applies to an individual, the excess relief shall be carried forward to the next tax year and, subject to sections 485E and 485G(2)(a)(iii), the individual shall, in computing the amount of his or her taxable income before the application of section 485E in that next tax year, be entitled to a deduction from his or her total income of an amount equal to the amount of the excess relief.

(2) If and so far as an amount equal to the excess relief once carried forward to a tax year under subsection (1) is not deducted or is not fully deducted from the individual’s total income for that year, the amount or the balance of the amount not deducted under subsection (1) shall be carried forward again to the next following tax year and, subject to section 485E, the individual shall, in that next following tax year, in computing the amount of his or her taxable income before the application of section 485E in that next following year, be entitled to a deduction from his or her total income of an amount equal to the amount so carried forward and so on for each succeeding tax year until the full amount of the excess relief has been deducted from the individual’s total income for the tax years concerned.

(3) Where subsection (1) or (2) applies for any tax year, relief shall be given to the individual for the tax year in the following order—

(a) in the first instance, in respect of any other tax relief apart from the relief provided for by this section,

(b) only thereafter, in respect of an amount carried forward from an earlier year in accordance with subsection (1) or (2), and in respect of such an amount carried forward from an earlier tax year in priority to a later tax year.

Miscellaneous (Chapter 2A).

485G.— (1) Nothing in this Chapter shall prevent an individual referred to in paragraph (b) of section 267(1) who is entitled to a repayment of the whole or any part of the appropriate tax (within the meaning of section 256) by virtue of subsection (3) of section 267 from obtaining any such repayment in accordance with that subsection.

(2) (a) Where this Chapter applies to an individual for a tax year, the following provisions shall apply as respects the individual and any specified relief used by the individual in the tax year—

(i) for the purposes of Part 9 and that Part as applied for the purposes of any other provision of the Tax Acts, the individual shall be treated as if all specified reliefs used by the individual in that year were used in full by that individual in that year notwithstanding section 485E,

(ii) the calculation of the amount unallowed under section 292 in the case of a specified relief shall take no account of the application of this Chapter to the relief for any tax year,

(iii) the application of this Chapter to a specified relief for any tax year shall not affect the determination of the amount of a balancing charge (within the meaning of section 274 and that section as applied for the purposes of any other provision of the Tax Acts) to be made on, or a balancing allowance (within the same meanings) to be made to, any individual in respect of that relief, but the amount of any such balancing charge to be made on that individual shall be reduced by the amount determined under paragraph (b) and where any such reduction applies the amount of the individual’s excess relief for the year in which the balancing charge arises plus any excess relief carried forward to that year and not deducted or not fully deducted for that year shall be reduced by an amount equal to the amount by which the balancing charge is reduced, and

(iv) the application of this Chapter to the individual for that year in respect of a specified relief shall be ignored for the purposes of determining whether any amount of the specified relief is available for carry-forward to a subsequent tax year.

(b) (i) The amount referred to in paragraph (a)(iii) is an amount equal to the lesser of—

(I) the amount of the individual’s excess relief for the year plus any excess relief carried forward to that year and not deducted or not fully deducted for that year, before any reduction by reference to paragraph (a)(iii), and

(II) an amount equal to the sum of the amounts determined in accordance with subparagraph (ii) in respect of each tax year for which—

(A) section 485E applied to the individual, and

(B) an allowance was made to the individual,

in respect of the building or structure in respect of which the balancing charge arises.

(ii) The amount referred to in subparagraph (i)(II) is an amount determined by the formula—

A x E

S

where—

A is the amount of the allowance made to the individual for a year,

E is the amount of the individual’s excess relief for that year, and

S is the individual’s aggregate of the specified reliefs for that year.

(3) Where this Chapter applies to an individual for a tax year, then, to the extent that there is included in the individual’s taxable income determined in accordance with section 485E any amount which, apart from this subsection, would be disregarded or not reckoned for the purposes of income tax or would be otherwise exempt from income tax under any of the provisions referred to in Schedule 25B, that amount shall, notwithstanding any other provision of the Tax Acts, be chargeable to income tax, and—

(a) the amount of tax for the year contained in any assessment to tax made on the individual for the year shall include any tax due by virtue of this subsection, and the provisions of the Tax Acts, including in particular those provisions relating to the assessment, collection and recovery of tax and the payment of interest on unpaid tax, shall apply as respects any tax due by virtue of this subsection, or

(b) where, but for this Chapter, no assessment to tax would be made on that individual for the year, the provisions of the Tax Acts, including in particular those provisions relating to the assessment, collection and recovery of tax and the payment of interest on unpaid tax, shall apply as respects any tax due by virtue of this subsection.”.

(2) The Principal Act is amended by inserting the following Schedule after Schedule 25A:

“Section 485C.

SCHEDULE 25B

List of Specified Reliefs and Method of Determining Amount of Specified Relief Used in a Tax Year