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Taxes Consolidation Act, 1997 (Number 39 of 1997)

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787R Liability to tax and rate of tax on chargeable excess.

(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 [2]>at the rate of 42 per cent<[2][13]>[2]>at the rate of 41 per cent<[2]<[13][13]>at the higher rate for the tax year (within the meaning of section 787TA(1)) in which the benefit crystallisation event giving rise to the chargeable excess occurs<[13], and

(b) [3]>sections 187 and 188<[3][3]>section 188<[3] shall not apply as regards income tax so charged.

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(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.

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(2) [14]>The persons liable<[14][14]>Subject to subsection (2A)(d), the persons liable<[14] for income tax charged under subsection (1) shall be 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.

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(2A) (a) Where an individual is a relevant member of a relevant pension arrangement, income tax charged under subsection (1) (in this subsection referred to as the ‘tax’) in respect of a chargeable excess arising on a benefit crystallisation event in respect of the relevant member under that arrangement shall be apportioned by the administrator between the relevant member and the non-member (in this subsection referred to as the ‘relevant parties’) in accordance with paragraph (b), and the persons liable for the tax so apportioned and the extent of their liability shall be the persons referred to in paragraph (d) and the liabilities referred to therein.

(b) Subject to the assumption in paragraph (c), the tax referred to in paragraph (a) shall be apportioned between the relevant parties such that each party’s share of the tax (in this Chapter referred to as the ‘appropriate share’) shall not exceed such part of the tax as would bear to that tax the same proportion as each party’s share of the retirement benefit (arising under the benefit crystallisation event giving rise to the tax) bears to that retirement benefit, having regard to the designated benefit payable to the non-member pursuant to the pension adjustment order.

(c) The assumption referred to in paragraph (b) is that, where a transfer amount has been applied to provide a retirement benefit for or in respect of the non-member, each party’s share of the retirement benefit arising under the benefit crystallisation event giving rise to the tax shall be determined as follows:

(i) in the case of the non-member—

(I) where the relevant pension arrangement referred to in paragraph (a) is a defined benefit arrangement and is the arrangement in respect of which the pension adjustment order has been made, it shall be the designated benefit on which the transfer amount was calculated, and

(II) in any other case, it shall be the transfer amount,

and

(ii) in the case of the relevant member, it shall be an amount equivalent to the amount determined by the formula—

A — B

where—

A is the retirement benefit arising under the benefit crystallisation event giving rise to the tax, and

B is the non-member’s share determined in accordance with clause (I) or (II), as the case may be, of subparagraph (i).

(d) The persons liable for the tax apportioned in accordance with paragraph (b) and the extent of their liability shall be—

(i) the administrator and the relevant member in respect of the relevant member’s appropriate share, and

(ii) (I) where no transfer amount has been applied to provide a retirement benefit for or in respect of the non-member (and notwithstanding the provisions of the pension adjustment order), the administrator and the non-member in respect of the non-member’s appropriate share, or

(II) where a transfer amount has been applied to provide a retirement benefit for or in respect of the non-member and—

(A) the non-member’s retirement benefit under the transfer arrangement has not crystallised at the date the subsequent administrator receives the certificate referred to in subsection (3B) or where the administrator and the subsequent administrator are the same person (in this section referred to as the ‘alternative circumstance’) at the date of the benefit crystallisation event giving rise to the chargeable excess (in this section referred to as the ‘alternative date’), the subsequent administrator and the non-member in respect of the non-member’s appropriate share, or

(B) the non-member’s retirement benefit under the transfer arrangement has crystallised at the date the subsequent administrator receives the certificate referred to in subsection (3B) or where the alternative circumstance arises at the alternative date and the non-member is in receipt of a pension payable from the transfer arrangement, the subsequent administrator and the non-member in respect of the non-member’s appropriate share, or

(C) the non-member’s retirement benefit under the transfer arrangement has crystallised at the date the subsequent administrator receives the certificate referred to in subsection (3B) or where the alternative circumstance arises at the alternative date and the non-member has exercised a relevant option under the transfer arrangement, the fund administrator and the non-member in respect of the non-member’s appropriate share,

or

(III) in any other case, the non-member in respect of his or her appropriate share,

and the liability of the persons referred to in subparagraph (i) and in clauses (I) and (II) of subparagraph (ii) shall be joint and several.

(e) Notwithstanding paragraph (d)(ii)(II), the liability of a subsequent administrator or a fund administrator shall not exceed the lesser of the non-member’s appropriate share and—

(i) in the case of a subsequent administrator, the amount or value of the assets in the transfer arrangement (in this subparagraph referred to as the ‘first-mentioned arrangement’) representing the non-member’s accrued rights under the arrangement at the time those rights are transferred to another relevant pension arrangement or at the time the non-member’s retirement benefit under the first-mentioned arrangement crystallise, as the case may be, or

(ii) in the case of a fund administrator, the amount or value of the assets in the approved retirement fund, approved minimum retirement fund (or the aggregate of those amounts or values where the non-member has an approved retirement fund and an approved minimum retirement fund) or vested PRSA (or the aggregate of those amounts or values where the non-member has more than one vested PRSA), as the case may be, at the date the fund administrator receives the certificate or copy certificate referred to in subsection (3C).

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(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.

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

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(3A) The references in subsections (2) and (3) to income tax charged under subsection (1) shall be deemed to be a reference to the amount of income tax so charged reduced, as appropriate, under section 787RA.

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(3A) The references in subsections (2), (2A)(d) and (3) to income tax charged under subsection (1) or to the appropriate share of that tax, shall be deemed to be references to the amount of income tax so charged or to the appropriate share of that tax, as the case may be, reduced, as appropriate, in accordance with section 787RA.

(3B) Where the provisions of subsection (2A) apply and a transfer amount has been applied, the administrator (other than where the alternative circumstance referred to in subsection (2A)(d)(ii)(II)(A) arises) shall establish the identity of the subsequent administrator and, within 21 days from the end of the month in which the benefit crystallisation event giving rise to the chargeable excess occurs, provide to the subsequent administrator a certificate stating—

(a) the name, address and telephone number of the administrator,

(b) details of the transfer arrangement, where known,

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

(d) the nature of the benefit crystallisation event referred to in paragraph (c) and the date on which it occurred,

(e) the full name, last known address and, where known, the PPS Number of the non-member,

(f) the amount of, and the basis of calculation of, the non-member’s appropriate share, and

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

(3C) (a) Where—

(i) the provisions of subsection (2A) apply and a transfer amount has been applied, and

(ii) at the date the subsequent administrator receives the certificate referred to in subsection (3B) the non-member’s retirement benefit under the transfer arrangement has crystallised and the non-member has exercised a relevant option under the transfer arrangement,

then, where the subsequent administrator and the fund administrator are not the same person, the subsequent administrator shall establish the identity of the fund administrator and, within 21 days from receipt of the certificate, forward a copy of the certificate (in this section referred to as the ‘copy certificate’) to the fund administrator.

(b) Where—

(i) the provisions of subsection (2A) apply and a transfer amount has been applied,

(ii) at the date of the benefit crystallisation event giving rise to the chargeable excess tax (in this paragraph referred to as the ‘event’) the non-member’s retirement benefit under the transfer arrangement has crystallised and the non-member has exercised a relevant option under the transfer arrangement, and

(iii) the alternative circumstance referred to in subsection (2A)(d)(ii) (II)(A) arises,

then, where the administrator and the fund administrator are not the same person, the administrator shall establish the identity of the fund administrator and, within 21 days from the end of the month in which the event occurs, provide to the fund administrator the certificate referred to in subsection (3B).

(3D) An administrator, subsequent administrator or fund administrator, as the case may be, shall within 21 days from—

(a) in the case of an administrator (including an administrator who is either or both the subsequent administrator and the fund administrator), the end of the month in which the benefit crystallisation event giving rise to the chargeable excess tax occurs, or

(b) in the case of a subsequent administrator or fund administrator, the date of receipt of a certificate or copy certificate, as the case may be,

inform the non-member by way of a notification in writing of the non-member’s liability for the non-member’s appropriate share of the chargeable excess tax and, where at the time the notification is due to be made the administrator or the subsequent administrator, as the case may be, is aware that the non-member is the person solely liable for the non-member’s appropriate share, inform the non-member as part of the notification of that fact and of the fact that the tax is due and payable by the non-member to the Collector-General in accordance with section 787S(3) within 3 months of the date of the notification.

(3E) Where a notification referred to in subsection (3D) is sent to a non-member in circumstances where the non-member is solely liable for the non-member’s appropriate share of the chargeable excess tax, a copy of the notice shall be sent by the administrator or the subsequent administrator, as the case may be, to the Revenue Commissioners at the same time.

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(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[5]>on or after the date of the passing of the Finance Act 2006<[5], 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 [6]>the specified date<[6][6]>7 December 2005<[6]

(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 [11]>section 787P(5), [7]>whether issued before or after the specified date, or, as the case may be, a copy of the revised certificate issued by the Commissioners under section 787P(6),<[7]<[11][11]>section 787P(7) or, as the case may be, a copy of the revised certificate issued by the Commissioners under section 787P(8) (or, where relevant, a copy of the earlier certificate),<[11] [9]>and<[9]

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

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(e) where the administrator of the arrangement is an administrator of a kind referred to in paragraph (d) of the definition of “administrator” in section 787O(1) and where relevant, details of the amount of unpaid tax required to be paid by the administrator and remitted to the Collector-General under subsections (18) and (19) of section 787TA, and

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

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(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

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(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,

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

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until such time as a declaration in writing containing the information specified in [12]>paragraphs (a) to (e)<[12][12]>paragraphs (a) to (f)<[12] 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.

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(5A) (a) In this subsection—

relevant administrator” means—

(i) in the case of a vested PRSA of a kind referred to in paragraph (c) of the definition of ‘vested PRSA’ in section 790D(1), the administrator of that vested PRSA, and

(ii) in the case of a vested RAC within the meaning of section 787O(1), the person with whom the individual (referred to in the definition of ‘vested RAC’ in that section) made the annuity contract;

relevant person” means—

(i) in the case of a vested PRSA of a kind referred to in paragraph (c) of the definition of ‘vested PRSA’ in section 790D(1), a PRSA contributor of a kind referred to in that paragraph, and

(ii) in the case of a vested RAC within the meaning of section 787O(1), an individual of a kind referred to in the definition of ‘vested RAC’ in that section;

date of the benefit crystallisation event” means, as the case may be, the date the relevant person attains the age of 75 years or, where the relevant person attains that age prior to the date of passing of the Finance Act 2016, the date of passing of that Act.

(b) Notwithstanding subsection (4), where a benefit crystallisation event of a kind referred to in subparagraph (bb) or (bc), as the case may be, of paragraph 2 of Schedule 23B occurs in relation to a relevant person, the relevant person shall, within the period of 30 days from the date of the benefit crystallisation event, provide a declaration containing the details referred to in subsection (4) to the relevant administrator.

(c) Where a relevant person fails to comply with paragraph (b), section 787Q shall apply to the benefit crystallisation event referred to in that paragraph as if the condition referred to in subsection (2)(b) of that section is met.

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(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 [21]>subsections (4) and (5)<[21][21]>subsections (4), (5) and (5A)<[21].

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(6A) (a) A subsequent administrator or a fund administrator, as the case may be, shall keep and retain a certificate referred to in subsection (3B) or a copy certificate referred to in subsection (3C), as appropriate, and

(b) an administrator, subsequent administrator and fund administrator shall keep and retain a copy of a notification referred to in subsection (3D),

for a period of 6 years following—

(i) in the case of an administrator, the date of the benefit crystallisation event giving rise to the chargeable excess tax or, where a transfer amount has been applied and the administrator and the subsequent administrator are the same person, the later of that date and the date of crystallisation of the non-member’s retirement benefit under the transfer arrangement,

(ii) in the case of a subsequent administrator in any other circumstance, the later of the date of crystallisation of the non-member’s retirement benefit under the transfer arrangement and the date of receipt of the certificate, or

(iii) in the case of a fund administrator, where the administrator and the fund administrator are the same person, the date of the benefit crystallisation event giving rise to the chargeable excess tax, and in any other circumstance, the date of receipt of the certificate or copy certificate, as the case may be,

and on being so required by a 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 such certificates, copy certificates or notifications specified therein.

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<[1]

[1]

[+]

Inserted by FA06 s14(1)(e). Has effect as on and from 7 December 2005.

[2]

[-] [+]

Substituted by FA07 s17(1)(c)(ii). Has effect as on and from 1 January 2007.

[3]

[-] [+]

Substituted by FA08 s5(g).

[4]

[-] [+]

Substituted by FA11 s19(3)(o). Has effect as on and from 7 December 2010.

[5]

[-]

Deleted by FA11 s19(3)(p)(i). Has effect as on and from 7 December 2010.

[6]

[-] [+]

Substituted by FA11 s19(3)(p)(ii). Has effect as on and from 7 December 2010.

[7]

[+]

Inserted by FA11 s19(3)(p)(iii). Has effect as on and from 7 December 2010.

[8]

[+]

Inserted by FA12 s18(6)(a). Has effect from 8 February 2012.

[9]

[-]

Deleted by FA12 s18(6)(b). Has effect from 8 February 2012.

[10]

[-] [+]

Substituted by FA12 s18(6)(b). Has effect from 8 February 2012.

[11]

[-] [+]

Substituted by F(No.2)A13 s18(2)(d)(i). Has effect from 1 January 2014.

[12]

[-] [+]

Substituted by F(No.2)A13 s18(2)(d)(ii). Has effect from 1 January 2014.

[13]

[-] [+]

Substituted by FA14 s19(4)(c)(i). Has effect on and from 1 January 2015.

[14]

[-] [+]

Substituted by FA14 s19(4)(c)(ii). Has effect on and from 1 January 2015.

[15]

[+]

Inserted by FA14 s19(4)(c)(iii). Has effect on and from 1 January 2015.

[16]

[-] [+]

Substituted by FA14 s19(4)(c)(iv). Has effect on and from 1 January 2015.

[17]

[-] [+]

Substituted by FA14 s19(4)(c)(v). Has effect on and from 1 January 2015.

[18]

[+]

Inserted by FA14 s19(4)(c)(vi). Has effect on and from 1 January 2015.

[19]

[-] [+]

Substituted by FA16 s14(1)(e)(i). Comes into operation on 25 December 2016.

[20]

[+]

Inserted by FA16 s14(1)(e)(ii). Comes into operation on 25 December 2016.

[21]

[-] [+]

Substituted by FA16 s14(1)(e)(iii). Comes into operation on 25 December 2016.