Does setting up my own pension relieve CGT?

A

alwaysonit

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Apologies for the uneducated question but the search function did not yield an answer.

A non-resident, with no contributions, plans to become a tax resident and live off investment returns only.

He is well below retirement age and wants to minimise tax exposure.

Will paying his savings into a pension fund have an advantage over keeping his (equity) investments and paying CGT when he needs to sell?
 
Can he pay his savings into a pension fund?
He will be resident here presumably when he wants to do this.

I know that the tax relief is limited to a percentage of his income depending on age.
But can he set up a pension fund?

Is he Irish?
He will probably qualify for an OAP.

Any cross-border issues like this need specialised tax advice.

Brendan
 
Thanks Brendan.

He will be resident here when he wants to do this.
He is an Irish citizen.
He will be unemployed (live off investment returns only) so is unsure if he can set up a pension fund.
He is below the age to receive OAP.
 
He can only establish a tax-exempt Pension Plan based on "earned income ". Investment income does not qualify as "earned income ".
 
Conan said:
He can only establish a tax-exempt Pension Plan based on "earned income ". Investment income does not qualify as "earned income ".
Click to expand...

As far as I know, a PRSA can be established without there being any earned income.
 
Possibly, but it seems the tax relief is a percentage of gross income (I imagine this is taxable income).
Also, the rate of tax relief is the highest rate of income tax you pay, which would be zero for him I imagine.

Tax relief on pensions

You can get income tax relief on your pension contributions. You can also get tax relief on a lump sum pension payment when you retire.
www.citizensinformation.ie www.citizensinformation.ie

So I cannot see any opportunity for a resident, with no contributions and no income tax payable, to avail of tax relief from a pension.
Please correct me if I have misinterpreted this, thanks.
 
cgt is 33% while pension income is up to 52%. Also won’t be able to access the pension till age 60. Better off saving personally

tax implications in home country would have to be considered too.
 
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