Tax relief on personal PRSA contributions

lawred2

If I am making personal contributions to a PRSA - how does one realise the tax relief?

Can contribution to personal PRSA be done before deduction of tax? i.e. payroll - would an employer have to facilitate this?

Is it done through tax credits/band? Or is it by way of annual rebate?

Merowig

Either the contribution happens through payroll - then the tax relief happens instantly.

Or you send over checks/ do a bank transfer to your PRSA - you will receive some kind of a certificate then from them (normally at years end) which you will send over to Revenue after which you will get your rebate.

Employers have to offer 1 PRSA or some other kind of pension scheme - but fee wise they might be not the best one for you.
They don't have to facilitate pay roll deduction to the PRSA you have chosen.

lawred2

Merowig wrote: »

Either the contribution happens through payroll - then the tax relief happens instantly.

Or you send over checks/ do a bank transfer to your PRSA - you will receive some kind of a certificate then from them (normally at years end) which you will send over to Revenue after which you will get your rebate.

Employers have to offer 1 PRSA or some other kind of pension scheme - but fee wise they might be not the best one for you.
They don't have to facilitate pay roll deduction to the PRSA you have chosen.

Rebate at the end of the year isn't exactly the worst thing even though it would mean taking the hit up front. Would work almost like a 12 month savings scheme...

Merowig

Did you check with your employer if he is offering some kind of pension scheme and more important if he would match any contributions?

lawred2

Merowig wrote: »

Did you check with your employer if he is offering some kind of pension scheme and more important if he would match any contributions?

They are but I refused to join the group scheme and am taking the contribution as salary...

Merowig

lawred2 wrote: »

They are but I refused to join the group scheme and am taking the contribution as salary...

On which you pay full tax - employer contributions though are not taxable. DC schemes have as well the advantage that often the fees are lower and that the employer is often covering the fees.

Mrs OBumble

Merowig wrote: »

On which you pay full tax.

You pay full tax up front, but get to claim it back later.

Certainly in my case, the deal i was able to negotiate outside of my employer's scheme was far better, so I have no problem with the pay-up-front-and-claim-later approach.

lawred2

Merowig wrote: »

lawred2 wrote: »

They are but I refused to join the group scheme and am taking the contribution as salary...

On which you pay full tax - employer contributions though are not taxable. DC schemes have as well the advantage that often the fees are lower and that the employer is often covering the fees.

sure

until I direct it to my own PRSA

and claim the due rebate

Merowig

My understanding is that Employer contributions are more valuable (as well tax wise) than having the salary increased by the contributions and putting the money then oneself in a PRSA - one of the reasons is that as far as I know you cannot claim back USC and PRSI on this....

Merowig

http://www.boards.ie/vbulletin/showthread.php?t=2057578377

lawred2

Merowig wrote: »

My understanding is that Employer contributions are more valuable (as well tax wise) than having the salary increased by the contributions and putting the money then oneself in a PRSA - one of the reasons is that as far as I know you cannot claim back USC and PRSI on this....

pension contributions whether deducted at source or not are only deductible from income tax. Nothing can be deducted from PRSI or USC burdens.

That's for both employee and employer portions.

So unless I'm missing something (which is possible) I don't really think there is much difference.

I am aware that the employer could cover management fees of course.

Merowig

I am not talking of employee contributions but of employer contributions.


Employer contributions are not part of your salary. But if you prefer to have your salary raised instead of employer contributions than this is in my eyes taxwise ineffcient.

lawred2

Merowig wrote: »

I am not talking of employee contributions but of employer contributions.


Employer contributions are not part of your salary. But if you prefer to have your salary raised instead of employer contributions than this is in my eyes taxwise ineffcient.

I get you now..