Tax question on PRSA (basic)

E

errigal

Registered User
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Hi
Im about to submit my tax return for 2004 (Im a paye worker)

If I open a PRSA today and stick in a lump sum, can I claim this back on my 2004 tax return, or do I have to wait til this time next year before I can include it in my 2005 returns.

Thanks in advance
 
If you make a lump sum contribution before October 31st in any tax year then you can set it against any pension tax relief that you have not used from the previous tax year. For example if you are in your 30s your age related pension tax relief is 20% of net relevant earnings (see ) so you can make a lump sum contribution of up to 20% of your 2004 earnings (in addition to whatever normal contributions you make in 2005) and then claim tax and PRSI relief back by sending Revenue details and a copy of your 2004 P60. Does that make sense to you?
 
Thanks - I think so.

I should have mentioned I didn't pay into a pension in 2004.

If I understand correctly, and let assume my gross earnings for 2004 were 40k for the sake of simplicity, given that Im in my 30s, I can submit a lump sum of 8000 Euro into a newly opened PRSA now and get full tax relief on it at 42% in my 2004 return ---> I can expect a cheque back from the taxman for about 3000 euro for this transaction.
 
Yes - that example is correct. You can also claim PRSI relief separately as per the link I posted above.
 
H Clubman
Wondering again if you misread my last message when I said in my 2004 tax return. ?

Im doing my tax return now but as I contributed nothing to PRSA in 2004 I dont think i get any tax relief. Am confused by the significance of the Oct 31 deadline... sorry!
 
Hi errigal,
Are you still confused ? I think I know where you coming from.
Its hard to believe, but Revenue are nice people really...they allow you to make a payment right up to 31 Oct 2005 into a new (or existing) PRSA , and offset it against tax you paid in 2004.
So set up the PRSA, write the cheque, PRSA provider will send you a form PRSA 1 or PRSA 2 , send it in with your 2004 tax return and wait 6 weeks for the mulla ! (Remember it was your money in the first place ...)
Pacman
 
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