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PRSA and Tax

  • 19-01-2021 2:41am
    #1
    Registered Users Posts: 23 DroidJoi


    I already have a pension fund with my employer and I'm hoping to set up an independent non-standard PRSA.


    I am aware of tax relief but whats the difference between getting my employer to pay directly or getting paid my net salary and then contributing towards the PRSA?


    The employer won't be contributing at all so the question is more around do I end up paying more tax if I get paid and invest from my net salary?


    The problem is I don't know how my employer can or can't support this and I'd like to keep this independent so even if I change jobs there shouldn't be any major issues. Unless of course, I'm out of pocket more if I get paid and then invest.


    For the record, I've never bothered with Revenue before as that is looked after by my employer. Hence these basic questions!


    Any comments/suggestions welcome.


Comments

  • Registered Users Posts: 1,994 ✭✭✭ colm_c


    Same tax relief, whether you do it, or your employer.

    Main benefit of employer doing it is cashflow.

    If you do it yourself, tax credits will be applied for the remainder of the year, so if you get 100 euro credits in Jan, that will be spread out out over 11 months.

    If your employer does it, your net salary goes down.


  • Registered Users Posts: 23 DroidJoi


    colm_c wrote: »
    Same tax relief, whether you do it, or your employer.

    Main benefit of employer doing it is cashflow.

    If you do it yourself, tax credits will be applied for the remainder of the year, so if you get 100 euro credits in Jan, that will be spread out out over 11 months.

    If your employer does it, your net salary goes down.


    Thanks. Tax Credit or Tax Relief? I thought you get "Tax Relief", i.e. tax free unto a certain limit based on your age?


    Mods - Just noticed there is a pensions forum too. Could this be moved? Thanks


  • Registered Users Posts: 1,994 ✭✭✭ colm_c


    If you pay it your self you get a tax credit, since you will pay it out of net salary.

    If your employer pays, it's done at source, so no tax credit.


  • Registered Users Posts: 14,544 ✭✭✭✭ Supercell


    Here's what I got back from revenue a while back, may help some others:

    To claim relief on avc payments made the following is required:
    (*) A copy of your AVC certificate confirming the amount paid and the date the contribution
    was made.
    (*) Your estimated net relevant earnings for the current tax year.
    (*) Confirmation of your total pension contributions relieved under the net pay arrangement
    in the current tax year.
    (*) Confirmation that your employer will not grant tax relief on your AVC.

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  • Registered Users Posts: 23 DroidJoi


    Supercell wrote: »
    Here's what I got back from revenue a while back, may help some others:

    To claim relief on avc payments made the following is required:
    (*) A copy of your AVC certificate confirming the amount paid and the date the contribution
    was made.
    (*) Your estimated net relevant earnings for the current tax year.
    (*) Confirmation of your total pension contributions relieved under the net pay arrangement
    in the current tax year.
    (*) Confirmation that your employer will not grant tax relief on your AVC.


    Thanks. Looks straightforward.


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