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Tax back for AVC contributions to PRSA

  • 31-10-2020 1:03pm
    #1
    Supercell
    Registered Users, Registered Users 2 Posts: 15,540 ✭✭✭✭


    Hoping someone here might be able to answer this, I'm a little confused as to the mechanics of the contributions from a tax perspective.

    If I create a separate AVC pension and contribute to that monthly how is this treated in terms of tax back if this is in addition to my work pension?

    Assuming I am contributing within my age allowed % maybe someone with one could clarify?

    For example say I contribute €1000 to the fund over the course of a year from my take home pay.
    If I am paying taxes at the 40% rate can I expect to get €400 back from the government at the end of the year or is it calculated differently?

    Can you claim this back quarterly or even monthly if desired?
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Comments

  • #2
    colm_c
    Registered Users, Registered Users 2 Posts: 2,032 ✭✭✭colm_c


    If you are within your limits, your prsa provider will give you a letter/cert and this can be applied to your tax credits on revenue.ie

    Bear in mind, it's split between credits and extending your 20% rate.

    i.e. if you put in 100 euro, you get tax credit for 20 euro, and the other 20 is added to your 20% tax credit.

    Bit weird, but ends up at ~40% overall.

    You can do this monthly, quarterly, annually.

    Obviously check with your prsa provider.


  • #3
    Geuze
    Registered Users, Registered Users 2 Posts: 14,026 ✭✭✭✭Geuze


    Supercell wrote: »

    If I create a separate AVC pension and contribute to that monthly how is this treated in terms of tax back if this is in addition to my work pension?


    For example say I contribute €1000 to the fund over the course of a year from my take home pay.
    If I am paying taxes at the 40% rate can I expect to get €400 back from the government at the end of the year or is it calculated differently?

    Can you claim this back quarterly or even monthly if desired?

    Yes, when you do your tax return, you will get the benefit of the tax relief.

    If it's a regular contribution, then it can be coded into your tax credits.


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