PRSA - tax rebate question.

E

errigal

Guest
Hi

If I setup a PRSA before the end of the year, and make a lump sum contribution, can I then claim this in my tax return for 04?

If this is the case it would certainly be worth my while setting this up pre-Xmas rather than waiting until early 05.

Thanks in advance.
 
If I setup a PRSA before the end of the year, and make a lump sum contribution, can I then claim this in my tax return for 04?

Yes. In fact if you had set one up before October 31st 2004 then you could have set the contribution against your 2003 earnings when claiming relief.

If this is the case it would certainly be worth my while setting this up pre-Xmas rather than waiting until early 05.

Not necessarily, looking at this purely from a tax point of view. Following on from the above you have until October 31st 2005 to make contributions on which you can claim tax relief against 2004 earnings. On the other hand if you need to start or top-up your pension then it may make sense to invest sooner rather than later in order to maximise the time that your money will be invested.

Note that technically you can also claim PRSI relief on standalone/off-payroll PRSA contributions but Social Welfare are .
 
Thanks

Thanks for the info.

For clarity... If I make a lumpsum contribution today for example, and then do my 04 tax return in the Spring, can I claim back what Im due then, even though I know I might make another contribution before Oct 05.

My read on this is that I should wait until I determine my total earnings for 04 (sometime in early 05) and then make my lumpsum pension payment up to the amount where I can claim relief (assuming I have that money on hand and am willing to put it away), rather than trying to guesstimate now on what this amount will be. In short, I might as well wait for a few mths to put it away (only downside is that the money will be invested for a slightly shorter timeframe but as this is a long term investment for me, this is ok)


Agree ?
 
Re: Thanks

For clarity... If I make a lumpsum contribution today for example, and then do my 04 tax return in the Spring, can I claim back what Im due then, even though I know I might make another contribution before Oct 05.

I presume from the talk about making a return in the spring that you may be self-employed? On the other hand I thought that the self employed return deadline was October 31st of each year? Whatever about that, I do know that if you are a PAYE worker and you make a lump sum contribution below the usual then you can simply with the relvant information (specifying which year you are claiming relief in respect of etc.) in order to get a tax refund.

My read on this is that I should wait until I determine my total earnings for 04 (sometime in early 05) and then make my lumpsum pension payment up to the amount where I can claim relief (assuming I have that money on hand and am willing to put it away), rather than trying to guesstimate now on what this amount will be. In short, I might as well wait for a few mths to put it away (only downside is that the money will be invested for a slightly shorter timeframe but as this is a long term investment for me, this is ok)

Again I'm not clear why your total earnings for 2004 would not be mostly predictable at this stage with less than two months of the tax year to go. My point about timing was simple that if you feel that you should be saving for retirement then you might want to do it sooner rather than later. If you need to top up your 2004 contribution to maximise your tax refund then you still have until October 31st 2005 to do so.

If in doubt you should get . If you are self employed then you should at least run things by your accountant.
 
Re: Thanks

Hi,

Similar to the scenario in this thread I'm setting up an executive pension (Occupational Pension Scheme) with Quinn Life. I work as a contractor through a Ltd. company of which I am a director. I want to contribute to the pension from my 2004 earnings and am trying to figure out how to do this. Would I do the following:

1. Start the pension with a lump sum contribution up to my allowable percentage from my own cash

2. Submit my Form 12 with the contributed pension amount specified and with the tax I've already paid specified (not the tax I would have paid had the pension been factored in)

3. This should indicate to Revenue that I've overpaid tax to the tune of 42% of the pension contribution. This I can claim back by applying in writing to revenue (which can be done after the 31st of October deadline)

Am I correct with this?

Thanks In Advance
 
Isn't Form 12 for PAYE employees only? Anyway, if you want to start or top up a pension with a lump sum in respect of unused pension tax relief attributable to 2004 then just do it before October 31st and the pension company will issue you with a receipt/certificate (a PRSA1 or an RAC for example) which Revenue will accept as proof of payment. Then you can write to them or file the relevant return to claim the tax back on the contributions. You don't need to file any return to "prove" to Revenue that you have made such a contribution before the relevant date. PRSI must be claimed back separately. See the key topics thread for the link to the relevant discussion on this issue.
 
It's a "Form 12 Directors" form that I'm returning. As far as I'm aware I have to return one due to being a proprietary director.

Thanks for the reply
 
I see. From first hand experience my comments above are correct for a PAYE employee in terms of starting or topping up the pension and using the RAC or PRSA1 form as proof of payment in time for the October 31st deadline allowing tax relief from the previous tax year to be claimed. However maybe there are other requirements for a non PAYE employee? Your accountant/tax advisor should be able to help you out I presume?
 
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