Finance Bill 2016 (subject to change prior to enactment)

Section 13 of the Finance Bill 2016 makes a number of amendments to Part 30 of, and Schedule 23B to, the Taxes Consolidation Act 1997 for the purposes of preventing certain tax avoidance opportunities in relation to Personal Retirement Savings Accounts (PRSAs). The amendments ensure that, where benefits are not taken by the PRSA owner on or before his or her 75th birthday, they will be treated as being taken on that date and, therefore, the PRSA will be treated as “vesting” on that date.

This means that, although the PRSA assets cannot be accessed after the date of the owner’s 75th birthday, they will, nonetheless, –

• be subject, from that date, to the imputed distribution regime that applies to vested PRSAs (and Approved Retirement Funds (ARFs)) under section 790D, 3

• be treated as a benefit crystallisation event occurring on that date for the purposes of the Standard Fund Threshold regime (which effectively places a lifetime benefit limit of €2 million on an individual’s tax relieved pension fund), and

• be treated on the death of the PRSA owner under the provisions relating to ARFs and not by way of a transfer of the PRSA assets to the deceased owner’s estate.

In the case of individuals who have a PRSA which has remained unvested beyond their 75th birthday, the PRSA will be deemed to vest on the date of passing of Finance Bill 2016 and transitional arrangements will apply. These amendments come into operation on the date of passing of the Bill.

Posted in Uncategorized.