Revenue Note for Guidance

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Revenue Note for Guidance

785 Approval of contracts for dependants or for life assurance

Summary

This section permits the Revenue Commissioners to approve under section 784 contracts made by individuals providing an annuity for the widow, widower, surviving civil partner or dependants of the individual whether or not the individual is providing benefits for himself or herself. It also provides for approval of contracts assuring lump sums to the personal representatives of the individual on his/her death before the agreed retirement age.

Details

(1) The Revenue Commissioners may approve a contract made by an individual with an annuity provider for the purposes of the Chapter if —

  • the main benefit is an annuity for the wife, husband, civil partner or dependants of the individual, or
  • the sole benefit is a lump sum payable to the individual’s personal representatives on death before the individual reaches the age of 75.

(1A) Where the annuity provider is not established in the State then it must be an insurance undertaking authorised to transact insurance business in the State under the relevant EU Directive (Directive 2002/83/EC of 5 November 2002) – thus applying the regulatory environment imposed by that Directive on such undertakings.

(2) The conditions for approval of a contract are —

  • any annuity payable to a wife, husband, civil partner or dependant must commence on the death of the individual,
  • any annuity payable to the individual under the contract must start after the individual reaches age 60, and before he/she reaches age 75, except where the annuity is, under the contract, to commence on the death of a person to whom an annuity would be payable if that person survived the individual (e.g. a husband may take out a contract to give his widow an annuity on his death, with an annuity benefit to himself if she should die before him – in such a case the restriction on the commencement of annuities after age 75 does not apply),
  • in the event of no annuities being paid to the individual, his or her spouse or civil partner or the individual’s dependant, the only other benefit permitted is a refund of premiums (plus interest or bonuses) to the individual’s personal representatives,
  • any annuity provided must be payable for the life of the annuitant,
  • no annuity may be capable of surrender, commutation or assignment in whole or in part.

(3) The Revenue Commissioners may approve a contract under the section even though it may not, in one or more respects, satisfy the conditions set out above.

(4) Subsections (2) and (3) of section 784 do not apply to the approval of a contract under this section.

(5) Trust schemes (or part of trust schemes) for groups of individuals under which benefits as set out above are provided may be approved in the same way as annuity contracts. The exemption from income tax which applies to the income from investments or deposits of the fund of a trust scheme approved under section 784 also applies to the income from investments and deposits of a trust scheme approved under this section.

(6) Premiums and contributions paid under contracts and schemes approved under this section qualify for the same treatment as payments to which section 784 applies.

Relevant Date: Finance Act 2020