# PRSA- am I receiving tax relief the right way?



## Happy Girl (30 Jan 2008)

Am being thrown from billy to jack by Revenue and wondering if anybody can shed any light on the following. Currently I am contributing to a PRSA which is paid by way of Direct Debit from my current account. I gave my wages dept a copy of my contract with my PRSA provider outlining all details about my contributions and they wages dept in turn give me the tax relief applicable. I am being told that it is an "either/or" situation i.e. either my monthly contribution is deducted from my wages and then relief can be given by way of net-pay arrangement OR my monthly contribution is paid by way of DD from my own current account and I sort out extra tax credits myself and claim back PRSI relief at end of year myself. What I am currently doing is a combination of both. Can anyone throw any light on it for me?


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## Stifster (30 Jan 2008)

Happy Girl said:


> Am being thrown from billy to jack by Revenue and wondering if anybody can shed any light on the following. Currently I am contributing to a PRSA which is paid by way of Direct Debit from my current account. I gave my wages dept a copy of my contract with my PRSA provider outlining all details about my contributions and they wages dept in turn give me the tax relief applicable. I am being told that it is an "either/or" situation i.e. either my monthly contribution is deducted from my wages and then relief can be given by way of net-pay arrangement OR my monthly contribution is paid by way of DD from my own current account and I sort out extra tax credits myself and claim back PRSI relief at end of year myself. What I am currently doing is a combination of both. Can anyone throw any light on it for me?


 
I'm doing the same, when i started my pension a few years back I got the relief on a monthly basis. Since i transferred it into a PRSA policy, the additional payments i claim in my annual tax return. As i have rental income it helps to set off against that.

So as far as i'm concerned "both" is fine.

If you don't need it on a monthly basis then a lump sum refund cheque from the revenue every year might be a better way to take it.


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## ClubMan (30 Jan 2008)

Pension contributions made via payroll should get tax and _PRSI_/health contribution relief at source. Basically the pension contribution is deducted from gross before any tax and _PRSI_/health contribution deductions are calculated on the balance (assuming that you're not contributing more than your age related pension tax relief limit). If you employer can facilitate this then this is the easiest way to do things.

Otherwise if you are making contributions from net pay by_ DD/SO _etc. then you apply to _Revenue _for a tax credit in respect of such ongoing contributions which will sort out the tax relief. You still need to claim _PRSI _relief manually at the end of the year once tax relief has been obtained.

Claiming PRSI relief on standalone private pension/PRSA contribution


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## ClubMan (30 Jan 2008)

Stifster said:


> I'm doing the same, when i started my pension a few years back I got the relief on a monthly basis. Since i transferred it into a PRSA policy, the additional payments i claim in my annual tax return. As i have rental income it helps to set off against that.
> 
> So as far as i'm concerned "both" is fine.
> 
> If you don't need it on a monthly basis then a lump sum refund cheque from the revenue every year might be a better way to take it.


Are you sure that you're claiming _PRSI_/health contribution relief?


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## Happy Girl (30 Jan 2008)

ClubMan said:


> Pension contributions made via payroll should get tax and _PRSI_/health contribution relief at source. Basically the pension contribution is deducted from gross before any tax and _PRSI_/health contribution deductions are calculated on the balance (assuming that you're not contributing more than your age related pension tax relief limit). If you employer can facilitate this then this is the easiest way to do things.
> 
> Otherwise if you are making contributions from net pay by_ DD/SO _etc. then you apply to _Revenue _for a tax credit in respect of such ongoing contributions which will sort out the tax relief. You still need to claim _PRSI _relief manually at the end of the year once tax relief has been obtained.


 
I understand what you are saying Clubman but I just want to check if the way it is being done is acceptable to revenue. I am receiving the correct tax relief through the payroll so it is only the procedure by which it is done is in question here. It is just so much easier to do it this way from my end as I don't have to apply for my PRSI relief at end of year and wouldn't need to change anything from the way it is being operated. Revenue are difficult to to deal with (that is after you have held for 15-20 mins to get somebody to answer the phone) given that when I did get thru to them this afternoon I was told that the way it is being done *IS* completely acceptable while another member of staff who is in the same position as me also rang her revenue office today to be told that it *IS NOT *an acceptable way to do it.


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## ClubMan (30 Jan 2008)

If you employer is facilitating contributions to your _PRSA _via payroll then you are getting tax and _PRSI _relief at source. As long as you are not also getting tax relief through your tax credits then everything should be fine.


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## LDFerguson (31 Jan 2008)

In Happy Girl's original post she says that her employer is NOT deducting her contributions from salary; she is paying them by Direct Debit.  So she should be claiming her own tax and PRSI relief.  

It may be the case that her helpful employer applied to Revenue for additional tax credits for her.  But I think it would be worth checking.


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## ClubMan (31 Jan 2008)

LDFerguson said:


> In Happy Girl's original post she says that her employer is NOT deducting her contributions from salary; she is paying them by Direct Debit.  So she should be claiming her own tax and PRSI relief.


Sorry - I missed that. In that case the approach taken certainly seems anomalous. Either you pay by _DD _from net pay and claim the tax and _PRSI_/health contribution relief yourself *OR *you have the contributions deducted at payroll and remitted by the employer and get tax and _PRSI_/health contribution relief at source. You can't mix the two approaches as far as I know.


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## Happy Girl (31 Jan 2008)

LDFerguson said:


> In Happy Girl's original post she says that her employer is NOT deducting her contributions from salary; she is paying them by Direct Debit. So she should be claiming her own tax and PRSI relief.
> 
> It may be the case that her helpful employer applied to Revenue for additional tax credits for her. But I think it would be worth checking.


 
Just to clarify my employer did not apply to Revenue for additional tax credits for me. I merely gave my wages dept the contract details and they allow me the appropriate relief on my contributions (which I pay via DD from my own current account). As previously stated there is no money owing to either myself or Revenue by doing this however I just want to be sure that the method by which it is done is acceptable.


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## ClubMan (31 Jan 2008)

I suspect that this approach is not correct and the company accountant really should know whether or not it is acceptable. I think that only if the employer is deducting and remitting pension contributions on your behalf should they be granting tax and _PRSI_/health contribution relief at source via payroll. Otherwise you should be claiming it manually after making the contributions from net pay. I suspect that you making the contributions from net income and the employer granting the relief at source would leave records out of sync with reality and might even be tantamount to you getting paid part of your income under the table or something! Maybe I'm wrong though... If you cannot get a clear answer from the accountant or _Revenue _then you probably need independent, professional advice.


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## Stifster (31 Jan 2008)

ClubMan said:


> Are you sure that you're claiming _PRSI_/health contribution relief?


 
I haven't. I think I actually got some information from someone a year or two ago and never got around to it.

Thanks for the reminder


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## Homer (31 Jan 2008)

Is it possible that your employer contacted Revenue when you advised them of your PRSA contributions and that Revenue issued revised tax credits and higher rate cut off to allow for these contributions?

This would allow you to get tax relief (but not PRSI relief) on the contributions. You would have to claim the PRSI relief from the PRSI refunds section in Sarsfield House, Limerick.

However, it all sounds a bit strange to me. Firstly, if you are an 'excluded employee' (i.e. not eligible to join a company pension scheme and pay AVCs within 6 months of joining service), your employer is _*obliged*_ to provide access through payroll to at least one standard PRSA. Otherwise, he could be fined by the Pensions Board.

Secondly, it's in your employer's interest to operate the PRSA through a 'net pay' arrangement. By so doing, he saves employer's PRSI of up to 10.75% on the amount contributed.

I suggest you talk to your employer and tell him to want to contribute to either the company pension plan or to a PRSA through payroll deduction.

Regards
Homer


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## ClubMan (31 Jan 2008)

Homer said:


> Is it possible that your employer contacted Revenue when you advised them of your PRSA contributions and that Revenue issued revised tax credits and higher rate cut off to allow for these contributions?


Wasn't this asked and answered already above?


LDFerguson said:


> It may be the case that her helpful employer applied to Revenue for additional tax credits for her. But I think it would be worth checking.





Happy Girl said:


> Just to clarify my employer did not apply to Revenue for additional tax credits for me.


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## Homer (31 Jan 2008)

Sorry, you're right, Clubman.  It was answered already.    I must have skipped over those mails in the thread.

I still think that you should talk to your employer, Happy Girl.  What they're doing at present does not sound right and it should be up to them, not you, to ensure that payroll is being operated correctly.

Regards
Homer


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## Happy Girl (1 Feb 2008)

Thank you all for all your replies. I have eventually got through to somebody in Revenue who seemed to know what they were talking about. She said that the way I am receiving tax relief on my PRSA contribution is incorrect and that I should submit my PRSA1 cert to revenue and they will adjust my tax credits accordingly. To continue getting my tax relief this way will leave a discrepancy between my P60 (which will show my total annual income as the figure of my basic minus my PRSA contributions against our Companys P35 which will show zero for "number of employees who contributed to PRSA products by way of deduction from payroll during the year". I must them claim PRSI relief myself at the end of the year.


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