Sheltering Maintenance Payments

[Fairplay]

I am divorced and in receipt of maintenace payments both for myself and my children. While the payments for my children are paid net, the maintenance I recieve is gross and I am liable for tax on it. I, sensibly, wanted to allocate some of the maintenance for the future as this may be uncertain in terms of continuity of maintenance. I am told that I cannot allocate moneyto a PRSA and obtain tax relief in the same way as any other income tax payer. Apparently as my income is not from a trade or employment it doesn't qualify - is this true or is there any way around it? Also am I resticted in terms of any other tax shelters that are available?

 

[MOB]

"is this true or is there any way around it?"

I don't do divorce work (much) so you would need to check this with your own solicitor, but if the sums involved are substantial, and your former spouse is not already maxing out his\her pension (AND is co-operative) there is effectively a way around it. Your partner could divert some of the maintenance payment into a PRSA, and a Pension Adjustment Order could be made in court allocating this PRSA solely to you. There is going to be a transaction cost to getting this done (four figures- I would guess perhaps €4k for both sides, but it could be more), so the sums need to be large enough to make it worth while.