Revenue Note for Guidance
This section provides rules for the computation of profits arising from pension business.
(1) The income and chargeable gains from investments of a life assurance company’s life fund and separate annuity fund, if any, as are attributable to the company’s pension business are exempt from corporation tax.
(2) This exemption extends to income and gains from transactions by pension funds in financial futures and traded options quoted on a futures exchange or stock exchange.
(3) The exemption from corporation tax in respect of a company’s income and gains referable to pension business does not rule out such income and gains being taken into account in computing a loss or gain for corporation tax purposes.
(4) When computing pension business profits chargeable to tax under Case IV of Schedule D, franked investment income is taken into account.
(5) However, where a company’s franked investment income in a period is less than its pension business profits chargeable under Case IV of Schedule D, the company may elect that its pension fund investment income is not to be treated as exempt and the franked investment income is not to be included as income in the Case IV computation.
An election must be made in writing to the inspector within 2 years of the end of the accounting period to which it relates, or within a longer period as the Revenue Commissioners may be notice in writing allow.
(6) When computing pension business profits chargeable under Case IV of Schedule D, annuities paid which are referable to pension business are deductible. Those annuities are not regarded as paid out of profits or gains brought into charge to income tax.
Relevant Date: Finance Act 2021