Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The primary purpose of the amendments being introduced is to reduce the potential for tax planning to avoid a tax which is legitimately owed. The primary purpose of the provision going forward is to stop this tax planning in its tracks and to make sure it would be financially irrational for an individual to allow a situation to arise where he or she does not vest his or her PRSA or RAC on or before his or her 75th birthday. If he or she does this in the future, he or she will not be able to access the benefits but will be taxed on them nonetheless. For individuals who may be contemplating this form of planning in the future, they have been forewarned in the legislation that the consequences will be severe. We assume that, rationally, they will avoid doing so. In the case of an individual who has got him or herself into the situation already and is not in a position to unwind the arrangement, in my view, it would clearly not be proportionate to impose potentially significant and, in the case of vested PRSAs, ongoing tax charges under the imputed distribution regime while at the same time not allowing the person to access their funds. An attitude of "They have made their bed so they should lie in it" seems to me to be unreasonable. These individuals may face chargeable excess tax. They will face notional distribution tax if they make their PRSA a net to the ARF. They will face the ARF regime on assets passed on death so they are not escaping. The purpose is to avoid tax avoidance through tax planning.