Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

103. To ask the Minister for Finance the reason for the substantial increase in exit tax paid on life assurance policies in recent years; and if he will make a statement on the matter. [16514/16]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am informed by Revenue that Life Assurance Exit Tax (LAET) applies to Assurance policies taken out from 1 January 2001 and is payable on the total or partial encashment of liable policies.

It is also payable on each 8-year anniversary of the inception of the policy provided the policy has not been encashed in full. As a result of this an increasing proportion of policies fall within the exit tax regime. Accordingly, it would be expected that receipts from exit tax would increase.

Additional factors contributing to a more noticeable increase in recent years are as follows:

- SSIAs were opened in the period 1 May 2001 to 30 April 2002 and matured during the period 31 May 2006 to 30 April 2007. Where funds arising from the maturity of investments in the SSIA scheme were reinvested in life assurance policies, LAET would have arisen in 2014 and 2015, being the first 8-year anniversary of such investments.

- The rate of Exit Tax has been increased over time from 23% on its introduction to 41% from 1 January 2014. The rates of tax are as follows: