# ARF Taxation



## sandk (18 Oct 2007)

At a time when the Government has difficulty in servicing pensions eg. garda, Teachers etc., why are they proposing to tax people who save to supply their own pensions. As from December 31 the Government are proposing a tax of 3% of all ARF accounts.


----------



## MMilken (18 Oct 2007)

No, they always taxed drawdown from ARFs.

This is the first year that if a person does not draw down, there will be a tax on an imputed drawdown (1% this year).


----------



## LDFerguson (18 Oct 2007)

> As from December 31 the Government are proposing a tax of 3% of all ARF accounts.


 
And the Government aren't proposing this - it's happening.  1% this year, 2% next year and 3% every year from 2009 onwards.


----------



## boaber (19 Oct 2007)

Prior to the Finance Act 1999, the only option on retirement after taking a tax free lump sum was to purchase an annuity - an income in retirement on which there was a tax liability.

Since then, ARFs are available as an alternative to certain people to either take an income from or once off drawdowns.

However, because people were just leaving the funds within the ARF, Revenue income has reduced.  This is probably the main reason why the imputed distribution was introduced.

MMilken is correct in stating that you have always been subject to PAYE on any income/drawdowns from ARFs - it's just from this year you will be taxed even if you don't take any money out.

You may not even have to pay any tax on this if you apply to your local inspector of taxes for a 'tax cert' quoting your QFM's employer tax reference number.  You can allocate some of your tax credit/standard rate cut off point to this particular income


----------



## MMilken (19 Oct 2007)

LDFerguson said:


> And the Government aren't proposing this - it's happening. 1% this year, 2% next year and 3% every year from 2009 onwards.


 
And it's not a 3% tax rate - it would be normal income tax at the standard and marginal rates...as the case may be.

It is applied to 1%, 2% and 3% of the ARF fund in respect of 2007, 2008 and 2009 (and every year thereafter) respectively.


----------



## boaber (19 Oct 2007)

MMilken said:


> It is applied to 1%, 2% and 3% of the ARF fund in respect of 2007, 2008 and 2009 (and every year thereafter) respectively.



Less any income/drawdowns already taken in the relevant year of course.


----------



## MMilken (19 Oct 2007)

boaber said:


> Less any income/drawdowns already taken in the relevant year of course.


 
Subject to a minimum of €0 (if the drawdown is greater than the relevant percentage of 1% or 2% or 3% then the tax would be applied to €0).


----------

