Finance Act, 2001

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Number 7 of 2001

FINANCE ACT, 2001

ARRANGEMENT OF SECTIONS

PART I

Income Tax, Corporation Tax and Capital Gains Tax

Chapter 1

Interpretation

Chapter 2

Income Tax

Chapter 3

Income Tax, Corporation Tax and Capital Gains Tax

Chapter 4

Corporation Tax

Chapter 5

Capital Gains Tax

PART 2

Excise

Consolidation and Modernisation of General Excise Law

Chapter 1

Interpretation, Liability and Payment

Chapter 2

Intra-Community Movement

Chapter 3

Offences, Penalties and Proceedings

Chapter 4

Powers of Officers

Chapter 5

Miscellaneous

PART 3

Customs and Excise

Miscellaneous

PART 4

Value-Added Tax

PART 5

Stamp Duties

PART 6

Capital Acquisitions Tax

PART 7

Anti-Speculative Property Tax

PART 8

Miscellaneous

SCHEDULE 1

Amendments Consequential on Changes in Personal Reliefs

SCHEDULE 2

Changeover to Calendar Year OF Assessment

SCHEDULE 3

Repeals and Revocations Relating to Excise Law

SCHEDULE 4

Rates of Excise Duty on Tobacco Products

SCHEDULE 5

Amendment of Enactments Consequent on Changeover to Euro

Number 7 of 2001

FINANCE ACT, 2001

AN ACT TO PROVIDE FOR THE IMPOSITION, REPEAL, REMISSION, ALTERATION AND REGULATION OF TAXATION, OF STAMP DUTIES AND OF DUTIES RELATING TO EXCISE AND OTHERWISE TO MAKE FURTHER PROVISION IN CONNECTION WITH FINANCE INCLUDING THE REGULATION OF CUSTOMS.

[30th March, 2001]

BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

PART 1

Income Tax, Corporation Tax and Capital Gains Tax

Chapter 1

Interpretation

Interpretation (Part 1).

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

Chapter 2

Income Tax

Tax credits.

2.—(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 2001 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) an appropriate percentage of an amount (in this section referred to as the “standard-rated allowance”) 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, in lieu of being the standard-rated allowance, be the amount of the tax credit specified in column (3) or column (4), as may be appropriate, of the Table opposite the mention of the amount in column (2).

TABLE

(2) Section 7 of the Finance Act, 1999 , and sections 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 and 12 of the Finance Act, 2000 , shall apply subject to the provisions of this section.

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

Alteration of rates of income tax.

3.—Section 15 of the Principal Act is amended—

(a) as respects the year of assessment 2001 and subsequent years of assessment, by the substitution of the following for subsection (4):

“(4) For the purposes of subsection (3), ‘specified income’ means total income after deducting from such income any deduction attributable to a specific source of income and any relevant interest within the meaning of Chapter 4 of Part 8.”,

(b) as respects the year of assessment 2001—

(i) by the substitution in subsection (3) of “£8,140” for “£6,000”, and

(ii) by the substitution of the following Table for the Table to that section:

“TABLE

PART 1

PART 2

PART 3

and

(c) as respects the year of assessment 2002 and subsequent years of assessment—

(i) by the substitution in subsection (3) of “€13,967” for “£6,000”, and

(ii) by the substitution of the following Table for the Table to that section:

“TABLE

PART 1

PART 2

PART 3

Age exemption.

4.—Section 188 of the Principal Act is amended—

(a) as respects the year of assessment 2001 and subsequent years of assessment—

(i) by the substitution of the following for subsections (1) and (2):

“(1) In this section and in section 187—

‘income tax payable’ has the same meaning (inserted by the Finance Act, 2001) as in section 3, but without regard to any reduction of tax under section 244;

‘total income’ has the same meaning as in section 3, but includes income arising outside the State which is not chargeable to tax.

(2) In this section, ‘the specified amount’ means, subject to section 187(2)—

(a) in a case where the individual would apart from this section be entitled to a tax credit specified in section 461(a) (inserted by the Finance Act, 2001), £12,580, and

(b) in any other case, £6,290.”,

and

(ii) in subsection (3), by the substitution for “relief under section 461(2) as an individual referred to in paragraph (a)(i) of the definition of ‘specified amount’ in subsection (1) of that section” of “a tax credit specified in section 461(a)”,

and

(b) as respects the year of assessment 2002 and subsequent years of assessment, by the substitution, in subsection (2) (inserted by paragraph (a)), of “€21,586” for “£12,580” and of “€10,793” for “£6,290”.

Amendment of section 122 (preferential loan arrangements) of Principal Act.

5.—Section 122 of the Principal Act is amended, as respects the year of assessment 2001 and subsequent years of assessment, by the substitution in the definition of “the specified rate” in paragraph (a) of subsection (1) of—

(a) “6 per cent” for “4 per cent” in both places where it occurs, and

(b) “12 per cent” for “10 per cent”,

and the said definition, as so amended, is set out in the Table to this section.

TABLE

“the specified rate”, in relation to a preferential loan, means—

(i) in a case where—

(I) the interest paid on the preferential loan qualifies for relief under section 244, or

(II) if no interest is paid on the preferential loan, the interest which would have been paid on that loan (if interest had been payable) would have so qualified,

the rate of 6 per cent per annum or such other rate (if any) prescribed by the Minister for Finance by regulations,

(ii) in a case where—

(I) the preferential loan is made to an employee by an employer,

(II) the making of loans for the purposes of purchasing a dwelling house for occupation by the borrower as a residence, for a stated term of years at a rate of interest which does not vary for the duration of the loan, forms part of the trade of the employer, and

(III) the rate of interest at which, in the course of the employer's trade at the time the preferential loan is or was made, the employer makes or made loans at arm's length to persons, other than employees, for the purposes of purchasing a dwelling house for occupation by the borrower as a residence is less than 6 per cent per annum or such other rate (if any) prescribed by the Minister for Finance by regulations,

the first-mentioned rate in subparagraph (III), or

(iii) in any other case, the rate of 12 per cent per annum or such other rate (if any) prescribed by the Minister for Finance by regulations.

Amendment of section 126 (tax treatment of certain benefits payable under Social Welfare Acts) of Principal Act.

6.—Section 126 of the Principal Act is amended by the substitution, in subsection (8), of the following for paragraph (b) (inserted by the Finance Act, 2000 ):

“(b) Notwithstanding subsection (3) and the Finance Act, 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order, 1994 ( S.I. No. 19 of 1994 ), subsection (3)(b) shall not apply in relation to unemployment benefit paid or payable, in the period commencing on 6 April 1997 and ending on 31 December 2001, to a person employed in short-time employment.”.

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

7.—Section 467 of the Principal Act is amended by the substitution of—

(a) as respects the year of assessment 2001, “£7,400” for “£8,500” in both places where it occurs, and

(b) as respects the year of assessment 2002 and subsequent years of assessment, “€12,700” for “£8,500” in both places where it occurs.

Amendment of section 469 (relief for health expenses) of Principal Act.

8.—As respects the year of assessment 2001 and subsequent years of assessment, subsection (1) of section 469 of the Principal Act is amended—

(a) in the definition of “dependent”—

(i) by the substitution in paragraph (b) of “under section 465,” for “under section 465 or 466, and”,

(ii) by the substitution in subparagraph (ii) of paragraph (c) of “year of assessment, and” for “year of assessment;”, and

(iii) by the insertion of the following paragraph after paragraph (c):

“(d) any other person being—

(i) a relative of the individual, or of the individual's spouse, who is incapacitated by old age or infirmity from maintaining himself or herself,

(ii) the widowed father or widowed mother of the individual or of the individual's spouse, whether incapacitated or not, or

(iii) a son or daughter of the individual who resides with the individual and on whose services the individual, by reason of old age or infirmity, is compelled to depend;”,

(b) by the insertion of the following after the definition of “dependant”:

“‘educational psychologist’ means a person who is entered on a register maintained by the Minister for Education and Science for the purposes of this section in accordance with guidelines set down by that Minister with the consent of the Minister for Finance;”,

(c) in the definition of “health care”, by the deletion of “other than routine maternity care”,

(d) in the definition of “health expenses”, by the insertion of the following after paragraph (h):

“(i) as respects a dependant of the individual referred to in paragraphs (b) and (c) of the definition of ‘dependant’ either or both—

(I) educational psychological assessment carried out by an educational psychologist, and

(II) speech and language therapy carried out by a speech and language therapist;”,

(e) by the deletion of the definition of “routine maternity care”, and

(f) by the insertion of the following after the definition of “routine ophthalmic treatment”:

“‘speech and language therapist’ means a person approved of for the purposes of this section by the Minister for Health and Children in accordance with guidelines set down by that Minister with the consent of the Minister for Finance.”.

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

9.—Section 473 of the Principal Act is amended—

(a) as respects the year of assessment 2001, by the substitution in subsection (1) of the following definition for the definition of “the specified limit”:

“‘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,

£1,480; but, if at any time during the year of assessment the individual was of the age of 55 years or over, ‘specified limit’ means £2,960, and

(b) in any other case, £740; but, if at any time during the year of assessment the individual was of the age of 55 years or over, ‘specified limit’ means £1,480;”,

and

(b) as respects the year of assessment 2002 and subsequent years of assessment, by the substitution in subsection (1) of the following definition for the definition of “the specified limit”:

“‘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,

€2,540; but, if at any time during the year of assessment the individual was of the age of 55 years of over, ‘specified limit’ means €5,080, and

(b) in any other case, €1,270; but, if at any time during the year of assessment the individual was of the age of 55 years or over, ‘specified limit’ means €2,540;”.

Amendment of section 477 (relief for service charges) of Principal Act.

10.—Section 477 of the Principal Act is amended—

(a) as respects the year of assessment 2001 and subsequent years of assessment, by the substitution in paragraph (a) of subsection (6) of “subject to paragraph (d),” for “subject to paragraph (c),”,

(b) as respects the year of assessment 2001, by the substitution in paragraph (a) of subsection (7) of “£150” for “£50”, and

(c) as respects the year of assessment 2002 and subsequent years of assessment, by the substitution in paragraph (a) of subsection (7) of “€195” for “£50”.

Relief for trade union subscriptions.

11.—(1) The Principal Act is amended as respects the year of assessment 2001 and subsequent years of assessment—

(a) by the insertion in Part 2 of the Table to section 458 of the following after “section 472”:

“section 472C”,

(b) by the insertion after section 472B of the following section:

and

(c) by the insertion in section 1024(2)(a) of the following after subparagraph (viii):

“(viiia) relief under section 472C, to the husband or the wife according as he or she is entitled to the relief under the said section;”.

(2) As respects the year of assessment 2002 and subsequent years of assessment, section 472C (as inserted by subsection (1)) of the Principal Act is amended, in the definition of “specified amount” in subsection (1), by the substitution of “€130” for “£74”.

Amendment of Part 16 (income tax relief for investment in corporate trades — business expansion scheme and seed capital scheme) of Principal Act.

12.—Part 16 of the Principal Act is amended—

(a) in section 489, by the substitution in subsection (15), of “commencing on 6 April 1984 and ending on 31 December 2001” for “commencing on the 6th day of April, 1984, and ending on the 5th day of April, 2001”,

(b) in section 490, by the substitution, in both subsections (3)(b) and (4)(b), of “the year of assessment 2001” for “the year 2000-01”, and

(c) in section 496(2)(a)(ii)—

(i) by the substitution in clause (II) of “Shannon Free Airport Development Company Limited,” for “Shannon Free Airport Development Company Limited, or”,

(ii) by the substitution in clause (III) of “ Údarás na Gaeltachta Act, 1979 , or” for “ Údarás na Gaeltachta Act, 1979 ,”, and

(iii) by the insertion of the following after clause (III):

“(IV) as respects a subscription for eligible shares issued on or after 6 April 2001, a County Enterprise Board (being a board referred to in the Schedule to the Industrial Development Act, 1995 ) has, in accordance with the provisions of that Act, made a loan or grant to, or made an equity investment in, the qualifying company concerned,”.

Employee share ownership trusts — deceased beneficiaries.

13.—The Principal Act is amended—

(a) in section 519—

(i) in subsection (5)(a)—

(I) by the substitution in subparagraph (iv) of “the trust deed,” for “the trust deed, and”, and

(II) by the insertion after subparagraph (iv) of the following:

“(iva) the payment of any sum or the transfer of securities to the personal representatives of a deceased beneficiary under the terms of the trust deed, and”,

(ii) by the substitution of the following for subsection (7A):

“(7A) Where the trustees of a trust to which this section applies sell securities on the open market, any gain accruing to such trustees shall not be a chargeable gain if, and to the extent that, the proceeds of such sale are used—

(a) to repay monies borrowed by those trustees,

(b) to pay interest on such borrowings, or

(c) to pay a sum to the personal representatives of a deceased beneficiary.”,

(iii) by the insertion of the following after subsection (8):

“(8A) Where the trustees of a trust to which this section applies transfer securities to the personal representatives of a deceased beneficiary, any gain accruing to the trustees on that transfer shall not be a chargeable gain.

(8B) The payment of any sum as is referred to in subsection (7A)(c) or the transfer of any securities to which subsection (8A) applies shall, notwithstanding any other provision of the Income Tax Acts, be exempt from income tax.”,

(iv) in subsection (9)—

(I) by the substitution for “subsections (1) to (8)” of “subsections (1) to (8B)”,

(II) by the substitution in paragraph (c) of “Schedule 11,” for “Schedule 11, or”, and

(III) by the insertion after paragraph (c) of the following:

“(ca) the payment of any sum or the transfer of securities to the personal representatives of a deceased beneficiary of the trust, or”,

and

(v) by the insertion of the following after subsection (9):

“(10) For the purposes of this section—

‘deceased beneficiary’ means a person who on the date of such person's death—

(a) would have been eligible to have shares appropriated to him or her, had such shares been available for appropriation, under a scheme approved of by the Revenue Commissioners under Schedule 11 and for which approval has not been withdrawn, and

(b) was a beneficiary under the terms of a trust deed of an employee share ownership trust approved of by the Revenue Commissioners under Schedule 12 and for which approval has not been withdrawn and which trust deed contained provision for the transfer of securities to the trustees of the scheme referred to in paragraph (a) and for the payment of sums and for the transfer of securities to the personal representatives of deceased beneficiaries.”,

and

(b) in Schedule 12—

(i) by the insertion in subparagraph (2) of paragraph 12, of the following after clause (d):

“(da) to pay any sum or to transfer securities to the personal representatives of deceased persons who were beneficiaries under the terms of the trust deed;”,

and

(ii) by the insertion, in subparagraph (3) of paragraph 13, of the following after clause (d):

“(da) the payment of any sum to the personal representatives of a deceased person who was a beneficiary under the terms of the trust deed;”.

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

14.—Schedule 13 to the Principal Act is amended—

(a) by the substitution of “13. The Civil Service and Local Appointments Commissioners.” for paragraph 13,

(b) by the substitution of “42. Bord na Móna plc.” for paragraph 42,

(c) by the deletion of paragraphs 60 and 88, and

(d) by the addition of the following after paragraph 103:

Approved share option schemes.

15.—The Principal Act is amended, with effect from the passing of this Act—

(a) in Part 17, by the insertion after Chapter 3 (inserted by the Finance Act, 1999 ) of the following:

“CHAPTER 4

Approved Share Option Schemes

519D.—(1) The provisions of this section shall apply where an individual obtains a right to acquire shares in a body corporate—

(a) by reason of the individual's office or employment as a director or employee of that or any other body corporate, and

(b) that individual obtains the right in accordance with the provisions of a share option scheme approved under Schedule 12C and in respect of which approval has not been withdrawn.

(2) Tax shall not be chargeable under any provision of the Tax Acts in respect of the receipt of the right referred to in subsection (1).

(3) Subject to subsection (4) (except where paragraph 18(2) of Schedule 12C applies), if the individual exercises the right in accordance with the provisions of the scheme at a time when it is approved—

(a) tax shall not be chargeable under any provision of the Tax Acts in respect of any gain realised by the exercise of the right, and

(b) notwithstanding section 547(1)(a), the individual shall be deemed for the purposes of the Capital Gains Tax Acts to have acquired the shares, acquired by the exercise of the right, for a consideration equal to the amount paid for their acquisition.

(4) Subsection (3) shall not apply in relation to the exercise by any individual of a right in accordance with the provisions of a scheme if the period beginning with his or her obtaining the right and ending with his or her disposal of any of—

(a) the shares acquired by the exercise of the right, or

(b) in a case where section 584, 586 or 587 applies, the shares received in exchange for the shares so acquired,

is less than 3 years.

(5) (a)  Where, in exercising a right in accordance with the provisions of the scheme at a time when it is approved, the individual acquires scheme shares from a relevant body, neither a chargeable gain nor an allowable loss shall accrue to the relevant body on the disposal of the scheme shares, and the individual shall, notwithstanding section 547(1)(a), be deemed for the purposes of the Capital Gains Tax Acts to have acquired the scheme shares for a consideration equal to the amount paid for their acquisition.

(b) In this subsection and in subsection (6)—

‘relevant body’ means a trust or a company which exists for the purpose of acquiring and holding scheme shares;

‘scheme shares’ has the meaning assigned to it by paragraph 11 of Schedule 12C.

(6) (a)  Subject to paragraph (c), this subsection applies to a sum expended by a company in establishing a share option scheme which the Revenue Commissioners approve of in accordance with the provisions of Schedule 12C and under which, subject to subsection (7), no employee or director obtains rights before such approval is given.

(b) A sum to which this subsection applies shall be included—

(i) in the sums to be deducted in computing for the purposes of Schedule D the profits or gains of a trade carried on by the company, or

(ii) if a company is an investment company within the meaning of section 83 or a company in the case of which that section applies by virtue of section 707, in the sums to be deducted under section 83(2) as expenses of management in computing the profits of the company for the purposes of corporation tax.

(c) Notwithstanding paragraph (b) or any other provision of the Tax Acts, any sum expended by a company, either directly or indirectly, to enable a relevant body to acquire scheme shares shall not be included—

(i) in the sums to be deducted in computing for the purposes of Schedule D the profits or gains of a trade carried on by the company, or

(ii) if the company is an investment company within the meaning of section 83 or a company in the case of which that section applies by virtue of section 707, in the sums to be deducted under section 83(2) as expenses of management in computing the profits of the company for the purposes of corporation tax.

(d) In a case where—

(i) paragraph (b) applies, and

(ii) the approval is given after the end of the period of 9 months beginning on the day following the end of the accounting period in which the sum is expended,

then, for the purposes of paragraph (b), the sum shall be treated as expended in the accounting period in which approval is given and not the accounting period mentioned in subparagraph (ii).

(7) (a) Where a share option scheme is approved by the Revenue Commissioners under Schedule 12C and, prior to such approval, an individual had obtained under the scheme a right which meets the conditions of paragraph (b), that right shall be treated for all the purposes of this section and Schedule 12C as if it had been obtained under an approved scheme.

(b) The conditions of this paragraph are—

(i) the right was exercised on or after 15 February 2001,

(ii) the scheme is approved by the Revenue Commissioners under Schedule 12C on or before 31 December 2001, and

(iii) at the time—

(I) the right was obtained, and

(II) the right was exercised, if such exercise occurred before the scheme was approved under Schedule 12C,

the scheme would, at each of those times, have been capable of approval under Schedule 12C if that Schedule had been in force from the time the right was obtained.”,

(b) by the insertion after Schedule 12B (inserted by the Finance Act, 1999 ) of the following:

“SCHEDULE 12C

Approved Share Option Schemes

Interpretation

1. (1) For the purposes of this Schedule—

‘approved’ in relation to a scheme, means approved under paragraph 2;

‘associated company’ has the same meaning as in section 432;

‘auditor’, in relation to a company, means the person or persons appointed as auditor of the company for the purposes of the Companies Acts, 1963 to 1999, or under the law of the territory in which the company is incorporated and which corresponds to those Acts;

‘control’ has the same meaning as in section 432;

‘full-time director’, in relation to a company, means a director who is required to devote substantially the whole of his or her time to the service of the company;

‘grantor’ has the meaning given by paragraph 2(1);

‘group scheme’ has the meaning given by paragraph 2(3);

‘key employee or director’, in relation to a company, means an employee or a full-time director of the company whose specialist skills, qualifications and relevant experience are vital to the future success of the company and is so certified to the Revenue Commissioners by the company;

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

‘participating company’, in relation to a group scheme, has the meaning given by paragraph 2(4);

‘scheme shares’ has the meaning given by paragraph 11;

‘shares’ includes stock.

(2) Section 10 shall apply for the purposes of this Schedule.

(3) Subsection (3) of section 433 shall have effect in a case where the scheme is a group scheme, with the substitution of a reference to all the participating companies for the first reference to the company in subparagraph (ii) of paragraph (c) of that subsection.

(4) For the purposes of this Schedule—

(a) a company is a member of a consortium that owns another company if it is one of not more than 5 companies which between them beneficially own not less than 75 per cent of the other company's ordinary share capital and each of which beneficially owns not less than 5 per cent of that capital, and

(b) the question of whether one company is controlled by another shall be determined in accordance with section 432.

Approval of schemes

2. (1) On the application of a body corporate (in this Schedule referred to as the ‘grantor’) which has established a share option scheme, the Revenue Commissioners shall approve the scheme if they are satisfied that it fulfils the requirements of this Schedule.

(2) An application under subparagraph (1) shall be made in writing and contain such particulars and be supported by such evidence as the Revenue Commissioners may require.

(3) Where the grantor has control of another company or companies, the scheme may be expressed to extend to all or any of the companies of which it has control and in this Schedule a scheme which is expressed so to extend is referred to as a ‘group scheme’.

(4) In relation to a group scheme, ‘participating company’ means the grantor or any other company to which for the time being the scheme is expressed to extend.

3. (1) The Revenue Commissioners shall not approve a scheme under this Schedule if it appears to them that it contains features which are neither essential nor reasonably incidental to the purpose of providing for employees' and full-time directors' benefits in the nature of rights to acquire shares.

(2) The Revenue Commissioners shall be satisfied—

(a) that there are no features of the scheme other than any which are included to satisfy requirements of this Schedule which have or would have the effect of discouraging any description of employees who fulfil the conditions in paragraph 8(1) from actually participating in the scheme, and

(b) where the grantor is a member of a group of companies, that the scheme does not and would not have the effect of conferring benefits wholly or mainly on directors of companies in the group or on those employees of companies in the group who are in receipt of the higher or highest levels of remuneration.

(3) For the purposes of subparagraph (2), ‘a group of companies’ means a company and any other companies of which it has control or with which it is associated.

(4) For the purposes of subparagraph (3), a company shall be associated with another company where it could reasonably be considered that—

(a) both companies act in pursuit of a common purpose,

(b) any person or any group of persons or groups of persons having a reasonable commonality of identity have or had the means or power, either directly or indirectly, to determine the trading operations carried on or to be carried on by both companies, or

(c) both companies are under the control of any person or group of persons or groups of persons having a reasonable commonality of identity.

4. (1) If, at any time after the Revenue Commissioners have approved a scheme, any of the requirements of this Schedule cease to be satisfied or the grantor fails to provide information requested by the Revenue Commissioners under paragraph 20, the Revenue Commissioners may withdraw the approval with effect from that time or such later time as the Revenue Commissioners may specify.

(2) If an alteration is made in the scheme at any time after the Revenue Commissioners have approved the scheme, the approval shall not have effect after the date of the alteration unless the Revenue Commissioners have approved the alteration.

5. If the grantor is aggrieved by—

(a) the failure of the Revenue Commissioners to approve the scheme or to approve an alteration in the scheme,

(b) the withdrawal of approval, or

(c) the failure of the Revenue Commissioners to decide that a condition subject to which the approval has been given is satisfied,

it may, by notice in writing given to the Revenue Commissioners within 30 days from the date on which it is notified of the Revenue Commissioners' decision, require the matter to be determined by the Appeal Commissioners, and the Appeal Commissioners shall hear and determine the matter in like manner as an appeal made to them against an assessment and all the provisions of the Income Tax Acts relating to such an appeal (including the provisions relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law) shall apply accordingly with any necessary modifications.

6. The Revenue Commissioners may nominate any of their officers, including an inspector, to perform any acts and discharge any functions authorised by this Schedule to be performed or discharged by them.

Eligibility

7. (1) The scheme shall not provide for any person to be eligible to participate in it, that is to say, to obtain and exercise rights under it—

(a) unless he or she is an employee or director of the grantor or, in the case of a group scheme, of a participating company, or

(b) at any time when he or she has, or has within the preceding 12 months had, a material interest in a close company within the meaning of Chapter 1 of Part 13, which is—

(i) a company the shares of which may be acquired pursuant to the exercise of rights obtained under the scheme, or

(ii) a company which has control of such a company or is a member of a consortium which owns such a company.

(2) Notwithstanding subparagraph 1(a), the scheme may provide that a person may exercise rights obtained under it despite having ceased to be an employee or a director.

8. (1) The scheme shall provide that, at any time, every person who—

(a) is an employee or a full-time director of the grantor or, in the case of a group scheme, a participating company,

(b) has been such an employee or director at all times during a qualifying period not exceeding three years, and

(c) is chargeable to tax in respect of that person's office or employment under Schedule E,

shall be eligible to participate in the scheme, that is to say, to obtain and exercise rights under it.

(2) Subject to paragraph 9 every person eligible to participate in the scheme shall do so on similar terms.

(3) For the purposes of subparagraph (2), the fact that—

(a) the rights to be obtained by persons participating in a scheme vary or are different—

(i) in the year of assessment in which they commence to hold the office or employment by virtue of which they are entitled to participate in the scheme, or

(ii) according to the levels of their remuneration, the length of their service or similar factors,

or

(b) a person is not entitled to receive rights within a stated period of his or her normal retirement date,

shall not be regarded as meaning that they are not eligible to participate in the scheme on similar terms.

9. (1) Subject to the conditions of this paragraph, the scheme may provide for an employee or a director, who is a key employee or director of the grantor or, in the case of a group scheme, a participating company, to obtain and exercise rights under it which do not satisfy the requirement of paragraph 8 regarding participation in the scheme on similar terms.

(2) The conditions of this paragraph are that, in any year of assessment—

(a) the total number of shares in respect of which rights have been granted to key employees and directors in accordance with a rule of the scheme which conforms with this paragraph does not exceed 30 per cent of the total number of shares in respect of which rights have been granted to all employees and directors participating in the scheme whether in accordance with this paragraph or paragraph 8, and

(b) an individual who obtains rights for a year of assessment by virtue of this paragraph shall not also be entitled to obtain rights for that year in accordance with paragraph 8.

10. In determining for the purposes of paragraph 7—

(a) whether a company is a close company, section 430(1)(a) and subsections (3) to (7) of section 431 shall be disregarded, and

(b) whether a person has or has had a material interest in a company, sections 437(2) and 433(3)(c)(ii) shall have effect with the substitution for the references in those provisions to 5 per cent of references to 15 per cent.

Scheme shares

11. The scheme shall provide for directors and employees to obtain rights to acquire shares (in this Schedule referred to as ‘scheme shares’) which satisfy the requirements of paragraphs 12 to 16.

12. Scheme shares shall form part of the ordinary share capital of—

(a) the grantor,

(b) a company which has control of the grantor, or

(c) a company which either is, or has control of, a company which—

(i) is a member of a consortium which owns either the grantor or a company having control of the grantor, and

(ii) beneficially owns not less than 15 per cent of the ordinary share capital of the company so owned.

13. Scheme shares shall be—

(a) shares of a class quoted on a recognised stock exchange.

(b) shares in a company which is not under the control of another company, or

(c) shares in a company which is under the control of a company (other than a company which is, or if resident in the State would be, a close company within the meaning of section 430) whose shares are quoted on a recognised stock exchange.

14. (1) Scheme shares—

(a) shall be fully paid up,

(b) shall not be redeemable, and

(c) shall not be subject to any restrictions other than restrictions which attach to all shares of the same class or a restriction authorised by subparagraph (2).

(2) Subject to subparagraph (3), the shares may be subject to a restriction imposed by the company's articles of association—

(a) requiring all shares held by directors or employees of the company or of any other company of which it has control to be disposed of on ceasing to be so held, and

(b) requiring all shares acquired, in pursuance of rights or interests obtained by such directors or employees, by persons who are not, or have ceased to be, such directors or employees to be disposed of when they are acquired.

(3) A restriction is not authorised by subparagraph (2) unless—

(a) any disposal required by the restriction will be by way of sale for a consideration in money on terms specified in the articles of association, and

(b) the articles also contain general provisions by virtue of which any person disposing of shares of the same class (whether or not held or acquired as mentioned in subparagraph (2)) may be required to sell them on terms which are the same as those mentioned in clause (a).

15. (1) In determining for the purposes of paragraph 14(1)(c) whether scheme shares which are or are to be acquired by any person are subject to any restrictions, there shall be regarded as a restriction attaching to the shares any contract, agreement, arrangement or condition by which such person's freedom to dispose of the shares or of any interest in them or of the proceeds of their sale or to exercise any right conferred by them is restricted or by which such a disposal or exercise may result in any disadvantage to that person or to a person connected with that person.

(2) Subparagraph (1) does not apply to so much of any contract, agreement, arrangement or condition as contains provisions similar in purpose and effect to any of the provisions of the Model Rules set out in the Listing Rules of the Irish Stock Exchange.

16. Except where scheme shares are in a company whose ordinary share capital consists of shares of one class only, the majority of the issued shares of the same class shall be held by persons other than—

(a) persons who acquired their shares in pursuance of a right conferred on them or an opportunity afforded to them as a director or employee of the grantor or any other company and not in pursuance of an offer to the public,

(b) trustees holding shares on behalf of persons who acquired their beneficial interests in the shares as mentioned in subparagraph (a), and

(c) in a case where the shares fall within subparagraph (c) of paragraph 13 but do not fall within subparagraph (a) of that paragraph, companies which have control of the company whose shares are in question or of which that company is an associated company.

Exchange provisions

17. (1) The scheme may provide that if any company (in this paragraph referred to as ‘the acquiring company’)—

(a) obtains control of a company whose shares are scheme shares as a result of making a general offer—

(i) to acquire the whole of the issued ordinary share capital of the company which is made on a condition such that if it is satisfied the person making the offer will have control of the company, or

(ii) to acquire all the shares in the company which are of the same class as the scheme shares,

(b) obtains control of a company whose shares are scheme shares in pursuance of a compromise or arrangement sanctioned by the court under section 201 of the Companies Act, 1963 , or

(c) becomes bound or entitled to acquire shares, under section 204 of the Companies Act, 1963 , in a company whose shares are scheme shares.

any participant in the scheme may at any time within the appropriate period, by agreement with the acquiring company, release his or her rights under the scheme (in this paragraph referred to as ‘the old rights’) in consideration of the grant to him or her of rights (in this paragraph referred to as ‘the new rights’) which are equivalent to the old rights but relate to shares in a different company (whether the acquiring company itself or some other company falling within subparagraph (b) or (c) of paragraph 12).

(2) In subparagraph (1) ‘the appropriate period’ means—

(a) in a case falling within clause (a) of that subparagraph, the period of 6 months beginning with the time when the person making the offer has obtained control of the company and any condition subject to which the offer is made is satisfied,

(b) in a case falling within clause (b) of that subparagraph, the period of 6 months beginning with the time when the court sanctions the compromise or arrangement, and

(c) in a case falling within clause (c) of that subparagraph, the period during which the acquiring company remains bound or entitled as mentioned in that clause.

(3) The new rights shall not be regarded for the purposes of this paragraph as equivalent to the old rights unless—

(a) the shares to which they relate satisfy the conditions specified, in relation to scheme shares, in paragraphs 12 to 16,

(b) the new rights will be exercisable in the same manner as the old rights and subject to the provisions of the scheme as it had effect immediately before the release of the old rights,

(c) the total market value, immediately before the release, of the shares which were subject to the participant's old rights is equal to the total market value, immediately after the grant, of the shares in respect of which the new rights are granted to the participant, and

(d) the total amount payable by the participant for the acquisition of shares in pursuance of the new rights is equal to the total amount that would have been payable for the acquisition of shares in pursuance of the old rights.

(4) Where any new rights are granted pursuant to a provision included in a scheme by virtue of this paragraph they shall be regarded—

(a) for the purposes of section 519D and this Schedule, and

(b) for the purposes of the subsequent application (by virtue of a condition complying with subparagraph (3)(b)) of the provisions of the scheme,

as having been granted at the time when the corresponding old rights were granted.

Transfer of rights

18. (1) The scheme shall not permit any person obtaining rights under it to transfer any of them but may provide that if such a person dies before exercising them, they may be exercised after, but not later than one year after, the date of that person's death.

(2) Where the scheme contains the provisions permitted by subparagraph (1) and any rights are exercised after the death of the person who obtained them, subsection (3) of section 519D shall apply with the omission of the reference to subsection (4) of that section.

Share price

19. The price at which scheme shares may be acquired by the exercise of a right obtained under the scheme shall be stated at the time the right is obtained and shall not be less than the market value of shares of the same class at that time or, if the Revenue Commissioners and the grantor agree in writing, at such earlier time or times as may be provided in the agreement, but the scheme may provide for such variation of the price so stated as may be necessary to take account of any variation in the share capital of which the scheme shares form part.

Information

20. (1) The Revenue Commissioners may by notice in writing require any person to furnish them, within such time as the Revenue Commissioners may direct (not being less than 30 days), with such information as the Revenue Commissioners think necessary for the performance of their functions under this Schedule, and which the person to whom the notice is addressed has or can reasonably obtain, including in particular information—

(a) to enable the Revenue Commissioners to determine—

(i) whether to approve a scheme or withdraw an approval already given, or

(ii) the liability to tax, including capital gains tax, of any person who has participated in a scheme,

and

(b) in relation to the administration of a scheme and any alteration of the terms of a scheme.

(2) Notwithstanding the generality of subparagraph (1), the Revenue Commissioners may request a certificate from the auditor of a grantor company certifying that, in his or her opinion—

(a) the terms of any rule or rules included in the scheme by virtue of either or both paragraphs 8 and 9 are complied with in relation to a year of assessment, or

(b) as respects rights obtained under the scheme before it was approved under this Schedule, the conditions in subsection (7)(b) of section 519D are satisfied.

21. (1) For the purposes of section 437(2), as applied by paragraph 10(b) of this Schedule, a right to acquire shares (however arising) shall be taken to be a right to control them.

(2) Any reference in subparagraph (3) to the shares attributed to an individual is a reference to the shares which, in accordance with section 437(2) as applied by paragraph 10(b) of this Schedule, fall to be brought into account in that individual's case to determine whether their number exceeds a particular percentage of the company's ordinary share capital.

(3) In any case where—

(a) the shares attributed to an individual consist of or include shares which that individual or any other person has a right to acquire, and

(b) the circumstances are such that, if that right were to be exercised, the shares acquired would be shares which were previously unissued and which the company is contractually bound to issue in the event of the exercise of the right,

then, in determining at any time prior to the exercise of that right whether the number of shares attributed to the individual exceeds a particular percentage of the ordinary share capital of the company, that ordinary share capital shall be taken to be increased by the number of unissued shares referred to in clause (b).”,

and

(c) in Schedule 29, by the insertion after “Schedule 9, paragraph 8” in Column 2 of:

“Schedule 12, paragraph 3(4)

Schedule 12A, paragraph 6

Schedule 12B, paragraph 5

Schedule 12C, paragraph 20”.

Amendment of provisions relating to employee share schemes.

16.—The Principal Act is amended—

(a) in Schedule 11, as respects profit sharing schemes approved on or after the passing of this Act, by the substitution in subparagraph (1A) (inserted by the Finance Act, 1998 ) of paragraph 4 of the following for clause (b):

“(b) For the purposes of this subparagraph—

(i) ‘a group of companies’ means a company and any other companies of which it has control or with which it is associated, and

(ii) a company shall be associated with another company where it could reasonably be considered that—

(I) both companies act in pursuit of a common purpose,

(II) any person or any group of persons or groups of persons having a reasonable commonality of identity have or had the means or power, either directly or indirectly, to determine the trading operations carried on or to be carried on by both companies, or

(III) both companies are under the control of any person or group of persons or groups of persons having a reasonable commonality of identity.”,

(b) in Schedule 12, as respects employee share ownership trusts approved on or after the passing of this Act, by the substitution in paragraph 2(2) (inserted by the Finance Act, 1998 ) of the following for clause (b):

“(b) For the purposes of this subparagraph—

(i) ‘a group of companies’ means a company and any other companies of which it has control or with which it is associated, and

(ii) a company shall be associated with another company where it could reasonably be considered that—

(I) both companies act in pursuit of a common purpose,

(II) any person or any group of persons or groups of persons having a reasonable commonality of identity have or had the means or power, either directly or indirectly, to determine the trading operations carried on or to be carried on by both companies, or

(III) both companies are under the control of any person or group of persons or groups of persons having a reasonable commonality of identity.”,

and

(c) in Schedule 12A (inserted by the Finance Act, 1999 ), as respects savings-related share option schemes approved on or after the passing of this Act, by the substitution in paragraph 3 of the following for subparagraph (3):

“(3) For the purposes of subparagraph (2)—

(a) ‘a group of companies’ means a company and any other companies of which it has control or with which it is associated, and

(b) a company shall be associated with another company where it could reasonably be considered that—

(i) both companies act in pursuit of a common purpose,

(ii) any person or any group of persons or groups of persons having a reasonable commonality of identity have or had the means or power, either directly or indirectly, to determine the trading operations carried on or to be carried on by both companies, or

(iii) both companies are under the control of any person or group of persons or groups of persons having a reasonable commonality of identity.”,

Provisions relating to certain approved profit sharing schemes and employee share ownership trusts.

17.—(1) The Principal Act is amended—

(a) in section 511A—

(i) by the insertion in subsection (2)(c) of “or paragraph 11A, as the case may be,” after “paragraph 11”, and

(ii) by the insertion in subsection (5) of “or paragraph 11A, as the case may be,” after “paragraph 11”,

(b) in Schedule 11—

(i) in paragraph 4—

(I) by the insertion in subparagraph (1A)(a)(i) of “, having regard to subparagraph (1B),” after “subparagraph (1)”, and

(II) by the insertion of the following subparagraph after subparagraph (1A):

“(1B) As respects a scheme which has been established by a relevant company (within the meaning of paragraph 1 of Schedule 12)—

(a) any reference in subparagraph (1)(a)(ii) to an employee or a full-time director shall be deemed to be a reference to an individual who was such an employee or a full-time director, as the case may be, of that relevant company or of a company within the relevant company's group (within the meaning of paragraph 1(3A) of Schedule 12) on the day the scheme was established, and

(b) for the purposes of satisfying the qualifying period requirement referred to in subparagraph (1)(b), such periods in which an individual was or is an employee or a director of a company referred to in subparagraphs (3)(b) and (13) of paragraph 11A of Schedule 12 shall also be taken into account.”,

(ii) in paragraph 12A by the insertion in subparagraph (b) of “or paragraph 11A, as the case may be,” after “paragraph 11”, and

(iii) by the insertion of the following paragraph after paragraph 13A:

“13B. (1) Nothing in paragraph 13 shall prevent shares being appropriated to an individual under an approved scheme established by a relevant company (within the meaning of paragraph 1 of Schedule 12) and where, in a year of assessment, shares have been appropriated to an individual under such an approved scheme, paragraph 13 shall apply as if those shares had not been appropriated to that individual in that year of assessment.

(2) Section 515 and paragraph 3(4) shall, subject to any necessary modification, apply in respect of all shares appropriated to that individual in that year of assessment.”,

and

(c) in Schedule 12—

(i) in paragraph 1—

(I) by the insertion in subparagraph (1) after the definition of “ordinary share capital” of the following:

“‘relevant company’ means—

(a) a company into which a trustee savings bank has been reorganised under section 57 of the Trustee Savings Banks Act, 1989 , or

(b) ICC Bank plc;”,

and

(II) by the insertion of the following subparagraph after subparagraph (3):

“(3A) For the purposes of this Schedule a company falls within the relevant company's group at a particular time if—

(a) it is the relevant company, or

(b) at that time, it is controlled by the relevant company and the trust concerned referred to in paragraph 2(1) is expressed to extend to it.”,

(ii) by the insertion of the following paragraph after paragraph 7:

“7A. Notwithstanding any other provision in this Schedule, in a case to which paragraph 11A applies, any reference in paragraph 8, 9 or 10 to an employee or a director of a company shall be construed as a reference to an individual who—

(a) was an employee or a director, as the case may be, of the relevant company or of a company within the relevant company's group on the day the trust was established, and

(b) is, at the relevant time (within the meaning, as may be appropriate in the circumstances, of paragraph 8, 9 or 10), an employee or a director, as the case may be, of a company referred to in paragraph 11A(3)(b).”,

and

(iii) by the insertion of the following paragraph after paragraph 11:

“11A. (1) Notwithstanding any other provision of this Schedule, in any case where a trust is established by a company which is a relevant company, this Schedule shall, with any necessary modification, apply as respects the beneficiaries under the trust as if this paragraph were substituted for paragraph 11.

(2) The trust deed shall contain provision as to the beneficiaries under the trust in accordance with this paragraph.

(3) The trust deed shall provide that a person is a beneficiary at a particular time (in this subparagraph referred to as the ‘relevant time’) if—

(a) the person was an employee or a director of the relevant company or of a company within the relevant company's group on the day the trust was established by that relevant company,

(b) the person is at the relevant time an employee or a director of—

(i) a company (in this subparagraph referred to as the ‘first-mentioned company’) which is, or was at any time since the day the trust was established, within the founding company's group,

(ii) a company within a group of companies (within the meaning of paragraph 2(2)(b)) which has acquired control of the first-mentioned company,

(iii) a company to which—

(I) an employee, or

(II) a director,

referred to in clause (a) has been transferred under either or both the European Communities (Safe-guarding of Employees' Rights on Transfer of Undertaking) Regulations, 1980 and 2000 and the Central Bank Act, 1971 , or

(iv) a company within a group of companies (within the meaning of paragraph 2(2)(b)), of which the company referred to in subclause (iii) is, or was at any time, a member,

(c) at each given time in a qualifying period the person was such an employee or a director of a company referred to in clause (b),

(d) in the case of a director, at that given time the person worked as a director of a company referred to in clause (b) or of a company within the relevant company's group at the rate of at least 20 hours a week (disregarding such matters as holidays and sickness), and

(e) the person is chargeable to income tax in respect of his or her office or employment under Schedule E.

(4) The trust deed may provide that a person is a beneficiary at a particular time if, but for subparagraph (3)(e), he or she would be a beneficiary within the rule which is included in the deed and conforms with subparagraph (3).

(5) Subject to subparagraph (6), the trust deed may provide that a person is a beneficiary at a particular time (in this subparagraph referred to as the ‘relevant time’) if—

(a) the person was an employee or a director of the relevant company or of a company within the relevant company's group on the day the trust was established by that relevant company,

(b) the person has at each given time in a qualifying period been an employee or a director of a company referred to in subparagraph (3)(b) at that given time,

(c) the person has ceased to be an employee or a director of a company referred to in subparagraph (3)(b),

(d) at each given time in the 5 year period, or such lesser period as the Minister for Finance may by order prescribe, commencing on the date the trust was established, 50 per cent or such lesser percentage as the Minister for Finance may by order prescribe, of the securities retained by the trustees at that time were pledged by them as security for borrowings, and

(e) at the relevant time a period of not more than 15 years has elapsed since the trust was established.

(6) The trust deed may provide that a person is a beneficiary at a particular time (in this subparagraph referred to as the ‘relevant time’) if—

(a) the person was an employee or a director of the relevant company or of a company within the relevant company's group on the day the trust was established by that relevant company,

(b) the person has at each given time in a qualifying period been an employee or a director of a company referred to in subparagraph (3)(b) at that given time,

(c) the person has ceased to be an employee or a director of a company referred to in subparagraph (3)(b), and

(d) at the relevant time a period of not more than 18 months has elapsed since the person so ceased.

(7) The trust deed shall not contain a rule that conforms with subparagraph (5) unless the rule is expressed as applying to every person within it.

(8) The trust deed may provide for a person to be a beneficiary if the person is a charity and the circumstances are such that—

(a) there is no person who is a beneficiary within the rule which is included in the deed and conforms with subparagraph (3) or with any rule which is so included and conforms with subparagraph (4), (5) or (6); and

(b) the trust is in consequence of being wound up.

(9) For the purposes of subparagraph (3), a qualifying period shall be a period—

(a) whose length is not more than 3 years,

(b) whose length is specified in the trust deed, and

(c) which ends with the relevant time (within the meaning of that subparagraph).

(10) For the purposes of subparagraphs (5) and (6), a qualifying period shall be a period—

(a) whose length is equal to that of the period specified in the trust deed for the purposes of a rule which conforms with subparagraph (3), and

(b) which ends when the person ceased as mentioned in subparagraph (5)(c) or (6)(c), as the case may be.

(11) The trust deed shall not provide for a person to be a beneficiary unless the person is within the rule which is included in the deed and conforms with subparagraph (3) or any rule which is so included and conforms with subparagraph (4), (5), (6) or (8).

(12) The trust deed shall provide that, notwithstanding any other rule which is included in it, a person cannot be a beneficiary at a particular time (in this subparagraph referred to as the ‘relevant time’) by virtue of a rule which conforms with subparagraph (3), (4), (5), (6) or (8) if—

(a) at the relevant time the person has a material interest in a company referred to in subparagraph (3)(b), or

(b) at any time in the period of one year preceding the relevant time the person has had a material interest in that company,

and for the purposes of this subparagraph any reference to a company shall, in a case to which clause (a) of the definition of relevant company applies, also include a reference to a trustee savings bank which has been reorganised into the relevant company concerned.

(13) For the purposes of satisfying the qualifying period requirement referred to in subparagraphs (3)(c), (5)(b) and (6)(b) a person shall also be regarded as such an employee or a director for any period in which that person is an employee or a director of, in a case to which clause (a) of the definition of relevant company applies, a trustee savings bank which has been reorganised into that relevant company.

(14) For the purposes of this paragraph ‘charity’ means any body of persons or trust established for charitable purposes only.

(15) Where an order is proposed to be made under subparagraph (5)(d), a draft of the order shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann.”.

(2) Subsection (1) shall apply and have effect as respects—

(a) a profit sharing scheme, or

(b) an employee share ownership trust,

approved on or after 12 December 2000.

Amendment of Part 30 (occupational pension schemes, retirement annuities, purchased life annuities and certain pensions) of Principal Act.

18.—Part 30 of the Principal Act is amended—

(a) in Chapter 1—

(i) in section 770(1):

(I) by the insertion of the following after the definition of “pension”:

“‘pension adjustment order’ means an order made in accordance with either section 12 of the Family Law Act, 1995 , or section 17 of the Family Law (Divorce) Act, 1996 ;”,

(II) by the substitution of the following for the definition of proprietary director:

“‘proprietary director’ means a director who, either alone or together with his or her spouse and minor children is or was, at any time within 3 years of the date of—

(i) the specified normal retirement date,

(ii) an earlier retirement date, where applicable,

(iii) leaving service, or

(iv) in the case of a pension or part of a pension payable in accordance with a pension adjustment order, the relevant date in relation to that order,

the beneficial owner of shares which, when added to any shares held by the trustees of any settlement to which the director or his or her spouse had transferred assets, carry more than 5 per cent of the voting rights in the company providing the benefits or in a company which controls that company;”,

and

(III) by the insertion of the following after the definition of “relevant benefits”:

“‘relevant date’ means, in relation to a pension adjustment order, the date on which the decree of separation or the decree of divorce, as the case may be, was granted, by reference to which the pension adjustment order in question was made;”,

and

(ii) in subsection (3A) (inserted by the Finance Act, 1999 ) of section 772, by the substitution of the following for subparagraph (i):

“(i) a proprietary director of, or where a pension or part of a pension is payable in accordance with a pension adjustment order, the spouse or former spouse to whom the pension or part of the pension is so payable, of a proprietary director of, a company to which the scheme relates, or”,

and

(b) in Chapter 2—

(i) in section 784, by the insertion of the following after subsection (6):

“(7) Notwithstanding anything in section 18 or section 19, any payment of an annuity made on or after 1 January 2002 in respect of an annuity contract approved under this section or under section 785 shall be regarded as a pension chargeable to tax under Schedule E, and Chapter 4 of Part 42 shall apply accordingly.”,

(ii) in paragraph (c) of subsection (6) of section 784E (inserted by the Finance Act, 1999 ), by the substitution, as on and from 25 March 1999, for “subsections (2) and (4)” of “subsections (2) to (4)”,

and

(iii) in section 787—

(I) by the deletion of subsection (9),

(II) by the substitution of the following for subsection (10):

“(10) Where in any year of assessment a reduction or a greater reduction would be made under this section in the relevant earnings of an individual but for an insufficiency of net relevant earnings, the amount of the reduction which would have been made but for that reason, less the amount of the reduction which is made in that year, shall be carried forward to the next year of assessment, and shall be treated for the purposes of relief under this section as the amount of a qualifying premium paid in the next year of assessment.”,

and

(III) by the deletion of subsection (12).

Amendment of section 470 (relief for insurance against expenses of illness) of Principal Act.

19.—(1) As respects the year of assessment 2001 and subsequent years of assessment, section 470 of the Principal Act is amended—

(a) in subsection (1)—

(i) by the substitution of the following for the definition of “relevant contract”:

“‘relevant contract’, in relation to an individual, means a contract of insurance which provides specifically, whether in conjunction with other benefits or not, for the reimbursement or discharge, in whole or in part, of actual health expenses (within the meaning of section 469) of—

(a) the individual,

(b) the spouse of the individual, or

(c) the children or other dependants of the individual or of the spouse of the individual;”,

and

(ii) by the insertion after the definition of “relevant contract” of the following:

“‘relievable amount’, in relation to a payment to an authorised insurer under a relevant contract, means—

(a) where the payment covers no benefits other than such reimbursement or discharge as is referred to in the definition of ‘relevant contract’, an amount equal to the full amount of the payment, or

(b) where the payment covers benefits other than such reimbursement or discharge as is referred to in that definition, an amount equal to so much of the payment as is referable to such reimbursement or discharge.”,

(b) by the substitution of the following for subsections (2) and (3):

“(2) Subject to subsection (3), where for a year of assessment—

(a) an individual, or

(b) if the individual is a married person assessed to tax in accordance with section 1017, the individual's spouse,

has made a payment to an authorised insurer under a relevant contract, then, the income tax to be charged on the individual for the year of assessment, other than in accordance with section 16(2), shall be reduced by an amount which is the lesser of—

(i) an amount equal to the appropriate percentage of the relievable amount in relation to the payment, and

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

(3) (a) Where, on or after 6 April 2001, an individual makes a payment to an authorised insurer in respect of a premium due on or after that date under a relevant contract for which relief is due under subsection (2), the individual shall be entitled to deduct and retain out of it an amount equal to the appropriate percentage, for the year of assessment in which the payment is due, of the relievable amount in relation to the payment.

(b) An authorised insurer to which a payment referred to in paragraph (a) is made—

(i) shall accept the amount paid after deduction in discharge of the individual's liability to the same extent as if the deduction had not been made, and

(ii) may, on making a claim in accordance with regulations, recover from the Revenue Commissioners an amount equal to the amount deducted.”,

and

(c) by the insertion of the following after subsection (4):

“(5) (a) The Revenue Commissioners shall make regulations providing generally as to administration of this section and those regulations may, in particular and without prejudice to the generality of the foregoing, include provision—

(i) that a claim under subsection (3)(b)(ii) by an authorised insurer, which has registered with the Revenue Commissioners for the purposes of making such a claim, shall—

(I) be made in such form and manner,

(II) be made at such time, and

(III) be accompanied by such documents,

as provided for in the regulations;

(ii) for the making of annual information returns by authorised insurers, in such form (including electronic form) and manner as may be prescribed, and containing specified details in relation to—

(I) each individual making payments to such insurers under relevant contracts in a year of assessment,

(II) the total amount of premiums paid under a relevant contract by that individual in the year of assessment, and

(III) the total amount deducted by that individual under subsection (3)(a);

and

(iii) for the furnishing of information to the Revenue Commissioners for the purposes of the regulations.

(b) 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 regulation 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.

(6) (a) Where any amount is paid to an authorised insurer by the Revenue Commissioners as an amount recoverable by virtue of subsection (3)(b)(ii) but is an amount to which that authorised insurer is not entitled, that amount shall be repaid by the authorised insurer.

(b) There shall be made such assessments, adjustments or set-offs as may be required for securing repayment of the amount referred to in paragraph (a) and the provisions of this Act relating to the assessment, collection and recovery of income tax shall, in so far as they are applicable and with necessary modification, apply in relation to the recovery of such amount.”.

(2) Notwithstanding any other provision to the contrary, in relation to the year of assessment 2001 an individual shall be entitled to relief under section 470 of the Principal Act in respect of premiums paid to an authorised insurer under a relevant contract both in that year and in the year preceding that year of assessment.

(3) Schedule 29 to the Principal Act is amended in column 1 by the insertion after “section 121” of “section 470 and Regulations under that section”.

Relief for premiums under qualifying long-term care policies, etc.

20.—The Principal Act is amended—

(a) in Chapter 1 of Part 15—

(i) by the insertion in Part 2 of the Table to section 458 of “Section 470A” after “Section 470”, and

(ii) by the insertion of the following after section 470:

(b) in Chapter 1 of Part 44, by the substitution in section 1024(2)(a) of the following for subparagraph (vi):

“(vi) relief under sections 470, 470A and 473, to the husband or to the wife according as he or she made the payment giving rise to the relief;”,

and

(c) in Schedule 29, by the insertion, in column 1, after “section 121” of “section 470A and Regulations under that section”.