Pension Lump Sum and Employee

OK I know that a self-employed taxpayer can start a pension now and pay a lump sum into it, which can then be used to get tax relief against their 2009 income

Can an employee (Class A PRSI) do the same thing, ie start a pension now (before 31-Oct), pay in a lump sum and use this lump sum to get tax back from the 2009 tax year?

Are there any rules which are different for employees which says that you can't do this in the first year that a pension starts or anything like that?

My instinct is that there are no problems doing this but I just want to be sure.

Check out Part 30 of the TCA Sections 770 to about 787. I'm just looking at the I.T.I. 2010 taxation summary and it mentions under PRSA's that the contributions to 31 October of a year may be treated as having been made in the previous year same as RAC's. It would seem inequitable if a self-employed person could get relief backdated but an employee not so my instinct would be same as you.

Section 776(3) TCA in relation to non-ordinary contributions

What time limit applies in order for a contribution to be deductible for a
tax year?
(3) For 2003 and later tax years, a non-ordinary contribution paid between the end of
the tax year and the return filing date for that tax year is deductible in that tax year,
provided a claim is made by the return filing date.

There's nothing like "legal speak" to get the brain to switch off!

I reckon we're OK anyway

[broken link removed]

Chapter 3 (Sect 3.4) states

"Relief for special contributions (or for a contribution not made under the net pay arrangement as in paragraph 3.3) is given by way of adjustment to the employee's tax credit certificate. If aggregate contributions exceed the annual relief limit, relief will be given on a spread forward basis. If a contribution is paid after the end of the year, but before the following 31 October, relief may be allowed in the earlier year provided an election to do so is made by the individual on or before the 31 October. Taxpayers filing returns under ROS may avail of the extended filing date to make an election and pay a contribution."

Thanks Graham

Hi DB74, i have the same question as you. i also want to put a lumpsump for pension for 2009 (i was PAYE at the time).
I spoke to pension fund managers in 2 different banks last week and were told that i can't backdated for 2009 as i was PAYE, he said it would be different if i was self-employed.
i think the statement above from revenue refers to self-employment. does it specifically point out it's for self-employment? ( i haven't gone in to read the full statement)
Those managers said if i put anything into my pension from now till before 31 Dec10, it would be for year 2010.
i then asked an accountant and he said he's pretty sure i can backdate for 2009 even though i was PAYE but said would check it out for me. i'm going in to see him today. i really hope he can get something positive for me as i earned quite a bit in 2009 and would of course like to have some tax written off if i put a lump sump in.
will let u know after the meeting with accountant.

Update- basically the accountant showed me the revenue document (chapter 3.4)link as shown above. He said he has spoken to revenue office and it should be ok but to be sure sure i need to engage him as my agent for him to be able to check specifically on my behalf with revenue. it'll cost me about 300 euro +VAT to use the accountant service, wondering if i can check with revenue office myself? anyone knows?

Of course you can check with Revenue yourself. And it will cost you nothing. Also the advice you will get from the revenue official will probably be the best you can get - all for free.

Tentman said:

Also the advice you will get from the revenue official will probably be the best you can get - all for free.

Click to expand...

You are joking aren't you

Most of the time in Revenue you get somebody whose job is to answer the phone, not provide specific tax advice.

I could ring Revenue with the same query 5 different times and get 5 different answers from 5 different people

I have the same problem, what is the solution?

Can I put a lump sum into a pension before the OCT 31st deadline

Something else - this may not be the correct forum for this, but I have also currently formed a company which is trading separate to my place of employment.
The lump some I would be hoping to contribute would be for 2009 and will come from my current employer.