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Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (10 Nov 2016)

Michael Noonan: ...fund.”,”. Section 13, as initiated, amended certain provisions of Part 30 of, and Schedule 23B to, the Taxes Consolidation Act 1997 with the aim of closing off tax planning opportunities involving the use of personal retirement savings accounts, PRSAs. This tax planning involved the PRSA owner never taking benefits from the PRSA, which meant that various taxes were avoided...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (10 Nov 2016)

Pearse Doherty: May we discuss the other amendments? Is it correct that a drawdown of 5% will be the imputed distribution on a vested PRSA?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (10 Nov 2016)

Pearse Doherty: The imputed distribution is the same as an ARF. The legislation will deem a PRSA vested on the 75th birthday of the owner of the PRSA. The ARF has an imputed distribution of 4% at the age of 61 and 5% at the age of 71, but if the legislation forces it to be vested at 75, the 4% will not be applicable.

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (10 Nov 2016)

Michael Noonan: ...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...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (10 Nov 2016)

Pearse Doherty: I appreciate that and I welcome the substance of the amendment and the amendment to the amendment. The issue I want to deal with is twofold so I will separate it out. One is on the vesting of the PRSA and the date at which it happens. I then want to discuss the transfer of the assets on death and how that will apply. I will focus on the first part of it first. If one has an ARF, there is...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (10 Nov 2016)

Pearse Doherty: ...taxation back. I am trying to figure out why, for an ARF, we have an age of 61 for 4% and 71 for 5% and then 6% if the pension pot is above €2 million but we now have a different age of 75 for a PRSA. Why could that not be earlier? This is an issue of tax planning because the longer the imputed distribution does not take place, the more beneficial it is to the individual.

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (10 Nov 2016)

Pearse Doherty: ...'s officials before Report Stage and get a paper on it. Does it have to be 75 years of age? Has a decision been made that it is a fair enough age for this calculation to kick in and for the PRSA to be deemed vested?

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (10 Nov 2016)

Pearse Doherty: The second part is on the transfer of the PRSA to a family member after death. Prior to this, one was able to transfer it tax free. Now it will be deemed to have the same standing as an approved retirement fund, ARF. My question is on the tax treatment of the passing of ARFs to family members. Somebody with a PRSA of €2 million, that is a pension pot of €2 million, has built...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (10 Nov 2016)

Pearse Doherty: Why is there a difference between transferring a PRSA to a person under 21 and one over 21? That could create an anomaly given that under existing law, the first €280,000 would be exempt from CAT, whereas if one is 21 years of age, one has to pay. If a PRSA was transferred of €300,000 from a father to a daughter, the first €280,000 would be exempt and the other...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (10 Nov 2016)

Michael McGrath: ...to go over some of the remarks the Minister put on the record there by way of explanation of some of the amendments but it is true to say that there is a different treatment in relation to vested PRSAs of those over the age of 75 proposed than those that apply to an ARF. I am not sure, having listened to that exchange, what the logic is. Given that the Minister is proposing to...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (10 Nov 2016)

Michael Noonan: I move amendment No. 54:In page 22, to delete lines 8 to 15 and substitute the following:"(a) the PRSA administrator—(i) on or before 31 March 2017—(I) commences payment of an annuity to the PRSA contributor, (II) pays a lump sum to the PRSA contributor, in accordance with section 787G(3)(a), (III) makes assets of the PRSA available to the PRSA contributor, or (IV) transfers...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (10 Nov 2016)

Michael Noonan: ...at subparagraph (b), (ba) or (c) of paragraph 2 of Schedule 23B, refuse to transfer an amount to the individual, or to any of the funds referred to in the said subparagraph (b), refuse to make assets of the PRSA referred to in the said subparagraph (ba) available to the PRSA contributor or, as the case may be, refuse to make a payment or transfer referred to in the said subparagraph...

Select Committee on Finance, Public Expenditure and Reform, and Taoiseach: Finance Bill 2016: Committee Stage (Resumed) (10 Nov 2016)

Michael Noonan: I move amendment No. 59:In page 23, to delete line 9 and substitute the following:"of 'vested PRSA' in section 790D(1), (bc) the relevant pension arrangement becomes a vested RAC within the meaning of section 787O(1),",".