bonus as AVC

[comanche]

Hi

I have set up my pension so that my quartely bonus is payed in. It seems to be paid in full without any income tax being applied. I.e. the full amount has been paid in. However given that you get a tax break @ 42% for monies payed into pension should I be entitled to this tax break also. I.e. if I have payed in 1000 euro should I be entitled to a tax break of 420 or have I totally gotten the wrong end of the stick?

Thanks

 

[BRICKTOP]

You have gotton hold of the wrong end of the stick:

Bonus €1,000 into pension: Pension = €1,000

OR

Bonus €1,000 in pay: Cash to you €520, tax to taxman €420, PRSI & levies to taxman €60 (Assume you are under cap)

 

[ClubMan]

It seems to be paid in tax

Is this a typo?

without any income tax being applied. I.e. the full amount has been paid in. However given that you get a tax break @ 42% for monies payed into pension should I be entitled to this tax break also. I.e. if I have payed in 1000 euro should I be entitled to a tax break of 420 or have I totally gotten the wrong end of the stick?

You get full tax (e.g. 42% in your case) and PRSI relief (e.g. probably 6% in your case) on pension contributions up to the usual age related tax relief limits. If your bonus was paid via payroll into your pension then the full amount should have gone in and you have automatically received the full tax/PRSI relief. You are not entitled to further relief. For example you don't get €1000 paid gross into your pension and receive 42% + 6% relief on other income since you have already received 42% + 6% relief on the bonus that went directly into your pension.

Post crossed with BRICKTOP's and s/he said it more concisely than me!

 

[comanche]

Is this a typo?
You get full tax (e.g. 42% in your case) and PRSI relief (e.g. probably 6% in your case) on pension contributions up to the usual age related tax relief limits. If your bonus was paid via payroll into your pension then the full amount should have gone in and you have automatically received the full tax/PRSI relief. You are not entitled to further relief. For example you don't get €1000 paid gross into your pension and receive 42% + 6% relief on other income since you have already received 42% + 6% relief on the bonus that went directly into your pension.

Post crossed with BRICKTOP's and s/he said it more concisely than me!

yup typo - should read "paid in full".

Thanks for clearing that up.