Income Tax exemption for Pension

swanky

Hi there,
quick background:
- I've recently returned from working in Australia for the last 6 years. During that time I've paid into a compulsary superannuation fund (pension as such). I obviously can't touch that until retirement.
- I'm now back working in Ireland as a contractor (sole trading), set up for VAT, income tax etc.

Question is, if I want to deduct an amount, lets say 20,000 (20% of 100000 to keep it simple) to put into my superannuation fund overseas, am I liable for tax on that at the full rate, or at the reduced rate of tax such as if I was in a pension here. Basically I don't want to go through the bother of setting up a pension here to reduce my tax liability, as I'll most likely return to Australia in a year or so. I'd like to continue to contribute to my Australian pension, and pay the tax man here the reduced amount of liability on that 20%. So 100,000 - 20,000 = 80,000 is my declared taxable income.

Does anyone know if this is possible? I've called my local revenue and the person I got is still scratching their head.
I'm sure details of the fund, and all lodgements paperwork will be required to keep it all legal and that's not an issue.

Second to this, If I have to contribute to a pension fund here, can anyone recommend a fund? Plus what rate is the amount taxed at, if taxed at all?

Thanks guys

swanky

bump..

Mr. Incognito

hey there,

Good news and bad news.

generally contributions made to pensions will benefit from tax relief at an individuals marginal rate, i.e you can deduct it from gross income to give taxable income, the maximum relief is based on a percentage of the individuals net earnings (up to 30% maximum) and is capped a €262,382 which is indexed from 2007 - (I think this year it's about €283K odd from memory)

The Finance Act 2005 introduced a statutory basis of tax relief for migrant workers that have not been resident in ireland in the last three years and have been paying into an overseas penions
HOWEVER there is a requirement that such individuals are paying into an EU penions and hve been resident in another EU member state, i.e it only applies to EU migrant workers.

As your pension is set up in Oz you will not be eligible for any relief should you continue paying. Contributions will be charged to Irish tax.

Furthermore when it comes pay-day for this pension- unless you intend relocating to Austraia you will suffer double taxation on the proceeds- as it is an australian pension, with-holding tax will be applied in oz and income tax will be applied here on the remittance.

So in shory, if you intend staying in Ireland- move your pension here.

swanky

SetantaL wrote: »

As your pension is set up in Oz you will not be eligible for any relief should you continue paying. Contributions will be charged to Irish tax.

So can I contribue to a pension here and see if that pension will move the money to my australian fund when I move back? I want to move back in about a year or so, and while I'm here I still want to contribute, but obviously reduce my liability to revenue. My reducuction would be 20% as I'm 31.

Mr. Incognito

well, i'd probably ring my pension advisers in Oz and see if they can put a freeze on things for a year if you intend moving back- no point paying into a pension here if you intend to return and settle in oz