The tax relief was the point of my reply to you. It is not pensionable income.You don’t need to be working to contribute to a prsa. You can always draw down the relief in the future once you are in non pensionable employment.
The tax relief is a small point. 30 years of tax free growth is what this is about. We are clearly talking about estate planning here. Of course you wouldn’t do it if they couldn’t afford it
I don’t understand. Surely if the child went to work in the future that would create the pensionable incomeThe tax relief was the point of my reply to you. It is not pensionable income.
I understand the point that is being (and it would be 60 year tax free growth) made but it is fanciful because you can't enter a contract for a pension if you are under 18.
The money put into a pension has to be from earned income. If the proceeds are from an investment, it is not pensionable income and therefore income tax relief cannot be claim on it.I don’t understand. Surely if the child went to work in the future that would create the pensionable income
Again, the point I was referring to is a different one you are answering. Setting up a PRSA for a minor is fanciful.How is it fanciful? It’s extremely simple. 6k a year in a bare trust. At 18 set up the prsa and make the contribution. Invest the whole thing in 100% equities. Job done
have you ever had a client come to you at this time of the year, after been advised by their accountant to make a pension contribution to reduce the tax that was created by their rental income?The money put into a pension has to be from earned income. If the proceeds are from an investment, it is not pensionable income and therefore income tax relief cannot be claim on it.
But on a net basis the funds have grown substantially in the kids name. Actually It’s best to forget about it as there is a small tax leakage. No thinking outside the box allowed here.Again, the point I was referring to is a different one you are answering. Setting up a PRSA for a minor is fanciful.
Under the bare trust solution you are suggesting, there will still be deemed disposal (twice if set up early enough) which is what the OP was trying to avoid when he came up with the PRSA solution. So the problem isn't solved.
If the funds are not from income earned by the policy holder might Revenue also challenge/refuse access to that tax benefit too?But on a net basis the funds have grown substantially in the kids name. Actually It’s best to forget about it as there is a small tax leakage. No thinking outside the box allowed here.
The money put into a pension has to be from earned income.
If the client also has earned income, the two of them are indistinguishable. 45 year old with €100,000 earned income, €50,000 rental income. The amount they can contribute to a pension is €25,000 i.e. based on the earned income. In the original question, there is zero earned income and the money being invest wholly comes from the proceeds of an investment plan. The Revenue may reject the claim for tax relief.have you ever had a client come to you at this time of the year, after been advised by their accountant to make a pension contribution to reduce the tax that was created by their rental income?
Unless I have misunderstood you are saying that I can’t lodge this money to the pension as it was recieved from my tenant and not my job?
I think we have crossed wires here. Anyway as I said earlier it’s a small point.
Of course they have, the money has been invested for 18 years. But the OP wants to avoid deemed disposal. There will be two deemed disposals under the bare trust structure. If that is fine with the OP, that's up to him.But on a net basis the funds have grown substantially in the kids name. Actually It’s best to forget about it as there is a small tax leakage. No thinking outside the box allowed here.
This is just not true. When my wife came to Ireland we knew that she would have substantial future income on a self-employed basis (i.e. there were no potential complications of her being employed in a pensionable job and thus running the risk that this seed contribution would ultimately not get tax relief.)
We lobbed in a healthy whack into her pension in the knowledge that the tax relief could be claimed prospectively which is exactly what happened until the carried forward contribution was all used up. We received tax advice regarding this and a number of other points.
Where are your comments coming from?
Thanks Stephen. News to me. Can you point me to the legislation on this?It's in the TCA and the Revenue manual...
I think that there are two issues.Have tyou read the relevant page on citizensinformation.ie which explains simply the max tax relief you can get on pension contributions.
Tax relief on pensions
You can get income tax relief on your pension contributions. You can also get tax relief on a lump sum pension payment when you retire.www.citizensinformation.ie
At this point, I genuinely dont know what you are disputing in what Stephen has said. Can you clarify this ?
At this point, I genuinely dont know what you are disputing in what Stephen has said. Can you clarify this ?
This is where you are getting confused. This is precisely what's being disputed! As in - Steven has said, now repeatedly, thatYou have pointed out that it is possibloe to add to a pension for future tax relief is possible ( we all know that, its not disputed)......
The money put into a pension has to be from earned income.
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