Question about tax deductibility of company pension payment made after year end

[HeinekenTick]

Hello all,

I have a friend who is a non-proprietary director of a small company. As yet, there is no company pension scheme. The company is showing a profit for its 30 June 2010 year end so friend wants to set up a comapny pension scheme and pay the maximum into the pension scheme (based on director salary included in the 30 June 2010 accounts) in order to reduce the exposure to corporation tax.

Although the year end is 30 June 2010, my understanding is that the actual payment can be made up to six months after the year end and still be accounted for as a tax-deductible expense in the 30 June 2010 accounts.

Is my understanding correct? If not, could someone please clarify?

Many thanks.

 

[LDFerguson]

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Section 774(6), Taxes Consolidation Act 1997, provides that the amount of employer contributions shall be allowed to be deducted as an expense incurred in the year in which the sum is paid. No deduction can be given in respect of any provision for an amount due but not actually paid.

Liam D. Ferguson

 

[Conan]

It used to be the case that a Co. could include a provision in its accounts for a pension contribution actually paid after the year-end. But that was changed some years ago and now the Co. can only claim relief for actual contributions paid into the Pension Fund in the tax-year.