# €115,000 maximum tax-relievable contributions for pension purposes



## clerk (9 Feb 2011)

Totally confused on this.....

per Revenue leaflet it states...

*Contribution limit *
[FONT=Verdana,Verdana][FONT=Verdana,Verdana]*The annual earnings limit which (along with age-related percentage limits) determine maximum tax-relievable contributions for pension purposes is being reduced from €150,000 to €115,000 for 2011. The annual earnings limit for 2010 will also be deemed to be €115,000 for the purpose of determining how much of a pension contribution paid by an individual in 2011 will be treated as paid in 2010, where the individual elects under existing rules to have it so treated. *[/FONT][/FONT]
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[FONT=Verdana,Verdana][FONT=Verdana,Verdana]What does this mean in plain English.[/FONT][/FONT]
[FONT=Verdana,Verdana][FONT=Verdana,Verdana][/FONT][/FONT] 
[FONT=Verdana,Verdana][FONT=Verdana,Verdana]Does it mean that someone earning over €115,000 in 2011 loses all pension relief over the €115,000 threshold ?[/FONT][/FONT]

Also, all this stuff about " *paid by an individual in 2011 will be treated as paid in 2010, " *What is that all about ? Totally confused.

Sorry if this has been dealt with already but cannot find any thred on it.

Thanks.


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## Conan (9 Feb 2011)

Firstly it means that the maximum income an individual can use to determine his/her tax relieveable personal contribution is limited to 15%/20%/25%/30%/35% or 40% (depending on age) of €115,000. So if you are earning over €115,000, any contribution based on income over €115,000 is not tax allowable.
The second point is saying that if you make a contribution in 2011 but seek to backdate it for tax purposes to 2010, then the €115,000 limit will apply. Typically Self Employed who make their tax returns in Oct for the previous tax year can invest a contribution in Oct but seek to have it set against the previous tax year.  If they do that in Oct 2011, then the €115,000 cap will apply even if the contribution is deemed to be for the 2010 tax year.


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## clerk (10 Feb 2011)

Conan said:


> Firstly it means that the maximum income an individual can use to determine his/her tax relieveable personal contribution is limited to 15%/20%/25%/30%/35% or 40% (depending on age) of €115,000. So if you are earning over €115,000, any contribution based on income over €115,000 is not tax allowable.
> The second point is saying that if you make a contribution in 2011 but seek to backdate it for tax purposes to 2010, then the €115,000 limit will apply. Typically Self Employed who make their tax returns in Oct for the previous tax year can invest a contribution in Oct but seek to have it set against the previous tax year. If they do that in Oct 2011, then the €115,000 cap will apply even if the contribution is deemed to be for the 2010 tax year.


 
Ok, thanks for the reply.

When you say " any contribution based on income over €115,000 is not tax allowable. ". I think that refers to the % * factor depending on age, capped at €115k. I understand that. For AVCs and the like.

But does the cap mean for a person paying a 5% Employee contribution that over the €115,000 threshold they loss all their pension tax relief on their Employee pension contribution ? Say for a person on €150k and not self employed.

i.e. on the 5% of €35k ( €150k - €115k ) = €1,750 in this example, they get no tax relief for their Employee pension contribution.


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## Conan (10 Feb 2011)

Irrespective of actual earnings, you will not get relief on more than the age related % x €115,000.
So if you are aged 45 and the age related limit is 25%, the max tax relieveable contribution is 25% of €115,000 = €28,750. If you earn say €200,000 but contribute 10% to a pension plan, all is fully tax allowable as it is less than €28,750. But if you contribute 15% of €200,000 (€30,000) you are only allowed refief on €28,750.


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## clerk (11 Feb 2011)

Conan said:


> Irrespective of actual earnings, you will not get relief on more than the age related % x €115,000.
> So if you are aged 45 and the age related limit is 25%, the max tax relieveable contribution is 25% of €115,000 = €28,750. If you earn say €200,000 but contribute 10% to a pension plan, all is fully tax allowable as it is less than €28,750. But if you contribute 15% of €200,000 (€30,000) you are only allowed refief on €28,750.


 
Thanks that answers my Q but to be honest I was advised differently by a person who should know their stuff in a professional capacity.

I was actually of the opinion that you have outlined. 

Thanks very much


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