PRSA's

gerrycollins

I took out a PRSA over a year ago paying €190 a month into it.

I get paid approx €43k a year which puts me into the 42% tax bracket,im married living in Dublin

I was told to inform the revenue about it which took me a year to do kind of last thing on my mind over the last year only did it recently awaiting to hear back as I type

Just wondering, was told by bank that i would get back 42% of my €190 in tax credits as PRSA's are subject to relief this would equate to €91 I think if my calculations are correct,Is this true seems a lot to get back for a private pension

Tax office couldnt comment on it when I applied,understandable,but were unable to give me ball park figures to percentages

Anyone here able to answer is it 42% of investment?or how does it work?
cheers

BrianD

Does your employer not deduct your contribution at source and apply the tax relief then? Perhaps you are self employed.

Not only do you get tax relief of 42% but you also get the PRSI relief as well which is a further 6% (I think). The relief is generous as they want people to take them out. The only problem with this mass market off-the-shelf financial products is its hard to know if they are good value or just a nice earner for the financial services cos.

ck1

With effect from 1st January 2003 you can get a refund of PRSI apart from those earning Case I/II but to claim you must have first have claimed your tax back.

You stated that you are earning €43k gross and I am assuming that this is prior to paying any pension contribtuions as it appears that it is not being deducted directly from Salary. You also stated that you are married and based on the way you said it I am assuming that you are the sole earner therefore you limit for 20% tax is €38,400, you could therefore put in up to €4,600 and receive full tax relief at your highest rate. Different situation if your wife is also earning or you are taxed separately.

Much easier for you if your employer deducts this direct from salary.

gerrycollins

ck1 wrote:

With effect from 1st January 2003 you can get a refund of PRSI apart from those earning Case I/II but to claim you must have first have claimed your tax back.

You stated that you are earning €43k gross and I am assuming that this is prior to paying any pension contribtuions as it appears that it is not being deducted directly from Salary. You also stated that you are married and based on the way you said it I am assuming that you are the sole earner therefore you limit for 20% tax is €38,400, you could therefore put in up to €4,600 and receive full tax relief at your highest rate. Different situation if your wife is also earning or you are taxed separately.

Much easier for you if your employer deducts this direct from salary.

my loving wife is very unhappy with you she works too........we joint assesment me taking the bigger chunk
pension was set up by myself as wife works for same bank but different dept so she put me in contact with someone but they have since left the bank and new person im dealing with is right idiot(not making any sense). my 20% cut off is set at 32kish but never knew about PRSI relief thanks very much
for the info, have a child on the way(first one) trying to work out finances etc b4 birth as wife unsure about returning to work or going part time etc also waiting on budget to c if any provision for childcare which would suit us basically trying to figure out 4 months down the line when tax and all is sorted what disposal income we have then decide from there,business plan to implement next year gonna throw it all up in the air...... ah well such is life thanks for the info again

gerrycollins

BrianD wrote:

The only problem with this mass market off-the-shelf financial products is its hard to know if they are good value or just a nice earner for the financial services cos.

will let u know in 40 years time anyways good to have something set aside for late in life and if i can reduce my tax bill with it all the better

Reyman

I think you only get PRSI relief on a PRSA if you're self employed or if your employer pays the PRSA directly, but please correct me if i'm astray on this.

Don't forget by the way that the government is giving you tax relief on a temporary basis. When you get the pension you're allowed take a certain amount as a lump sum but the rest pays the full marginal tax rate - 42% or whatever plus PRSI

It's a kind of tax 'delay' effect

gerrycollins

Reyman wrote:

It's a kind of tax 'delay' effect

my understanding is that as u have said but i can pass up the lump sum and receive it in payments subject to the tax of the day or something like that

stiofanD

Reyman wrote:

I think you only get PRSI relief on a PRSA if you're self employed or if your employer pays the PRSA directly, but please correct me if i'm astray on this.

Certainly, if your employer is deducting your payment directly from payroll then you get the tax+PRSI relief automatically (because the payments are taken out before any tax due is calculated)

However, PRSI relief should be possible in other cases, even if you're not self-employed. I took out a PRSA earlier on this year, independant of my employer, so my payments into it are net of tax. Getting the 42% tax back was no problem (just sent a cert in to revenue). I was told that I would have to wait until after the end of the year to claim back the PRSI, but in theory that shouldn't be a problem either (or so I was told)

ck1

LOL, apologies to your wife but as you are jointly assessed, it makes no difference whatsoever. If for example, your earnings were €34,000 and you paid €5,000 pension and your wifes earnings were say €30,000 (her cut off point would be €26,800) you would still get full tax releif at marginal rate of 42%. If however you paid in €6000 you would only get marginal relief on €5,200 and lower rate relief on €800. And full PRSI relief except if yours or your wifes earnings were Case I/II (Self Employed earning) on that element.

gerrycollins

thanks very much guys great info will keep an eye out for tax man sent in forms two weeks ago dunno if i have to wait till end of year or implemented straight away. have a review early next year with tax man as i got married late this year so hopefully all will settle down then(wife accecpts apology lol)

ck1

Just a note for you. I noted you said you were married in this year. You will therefore be assessed as single persons however any extra tax paid in comparison to what would have been paid if you were jointly assessed is refundable but this is apportioned on the months you were married for.