Section 73 policy
Section 119, of the 1991 Finance Act (now S.73 CAT Consolidation Act) introduced a
complementary relief for the proceeds of certain policies in the payment of Gift Tax. The policy
proceeds in the event of a full or partial surrender would be exempt from Gift Tax when used to
pay Gift Tax in connection with a lifetime gift made by the owner of the policy relief was introduced by Section 60, of the 1985 Finance Act (now contained in S.72 of Capital
Acquisitions Tax Consolidation Act 2003) to allow people to plan for the payment of Inheritance
Tax in an efficient way.
If a life assurance policy is put in place to provide for the tax, the Revenue will not charge
Inheritance Tax on the policy proceeds if the money is used to pay Inheritance Tax arising on
the death of the lives assured under the policy.
Section 73 is designed to allow people to use the cash value of a savings plan, or combined life
and savings plan, to pay Gift Tax during their lifetime.