523 Deduction of tax from relevant payments

Summary

This section is the basic charging provision in the scheme of withholding tax from payments for professional services. It obliges an accountable person to deduct appropriate tax when making relevant payments. It also ensures that there can be no question of breach of contract on account of such deduction.

Details

Deduction of tax

(1) An accountable person is obliged to deduct appropriate tax from relevant payments. No question of a breach of contract can arise on account of such deduction. This is achieved by providing that the specified person, or the partnership where section 529A applies, is to accept such deduction and the accountable person, or a member or subscriber on whose behalf a health insurer makes a payment in respect of practitioners “fees” for professional services which give rise to relevant medical expenses, is discharged of so much money as it represented by the deduction as if that sum had actually been paid.

Refund of excess fees paid

(2) If a subscriber or member has paid any amount to a practitioner or a partnership, or a person acting on the practitioner’s behalf or on the partnership’s behalf, the practitioner must make a refund to the subscriber or member if the aggregate of the amount paid by the subscriber or member and the amount of benefit paid by the health insurer exceeds the amount of the practitioner’s fee.

Regulations

(3)(a) The Minister for Finance may make any regulation he/she considers necessary to secure the smooth operation of the withholding tax scheme in relation to payments made by health insurers.

Such regulations may set out the circumstances and manner in which a practitioner may demand or a subscriber or member may make, a payment (other than a relevant payment) of any amount for professional services which gives rise to relevant medical expenses and which are provided to the subscriber or member by a practitioner.

The regulations may provide for the indemnification of the subscriber or member against any charge of breach of contract being laid by a practitioner in respect of relevant medical expenses or as a result of any actions carried out or not carried out by the subscriber or member under this Chapter or the regulations made under this subsection.

(3)(b) Every regulation made under this subsection must be laid before the Dáil as soon as possible and are to be lawful unless a resolution annulling the regulation is passed by the Dáil within 21 sitting days of the Regulation being laid. If such a resolution is passed it will not affect the validity of any action carried out or not carried out by reference to the regulation in the intervening period.

No such regulations have been made to date.

Computation of profits or gains

(4) The provisions of the Tax Acts relating to the computation of profits or gains are not affected by the deduction of appropriate tax from relevant payments. The gross amount of such payments is, therefore, included in computing a specified person’s profits or gains for tax purposes. However, the amount of appropriate tax is available for set-off against the ultimate tax liability on such profits or gains (under section 526).

Relevant Date: Finance Act 2021