PRSA Advice

[geecee]

Hi All
Newbie at this so please be gentle!
About me:
33 year old single, no dependents, no pension scheme... But I want to start one - soon!

My SSIA will mature at end of April with approx 11K

Salary last year was 46.5K on which i paid €9394 in Tax
(made up of 6412 at lower rate, 6368 at higher, 3387 tax credit)

My salary this year is 52.5K so i presume this means i'm not entitled to the Govt 2.5K offer...

So my question is:
Can i invest €9394 from my SSIA in an AVC for 2006 (ie. last year)and write this off against my tax?

If so will i get a cash refund from the Revenue for this, or will it be added to my PRSA, or what will happen to the money?

If its a refund, What refund would i be entitled to?
Is it €9394 * 0.42 = €3945

or would it be (Lower rate-tax credit x 0.21)+(Higher rate x 0.42)=3309

Or is it that i should only invest (Salary-Standard rate cut off point 32k)x 0.42 =6090 and claim 0.42 back on that = 2557

Or some other weird and wonderful combination?
(or maybe i'm just looking for free money where it doesn't exist!)

Thanks in advance to anyone who answers

 

[Westbound]

Hi

As you are 33 you can invest up to 20% of your total earings into a PRSA for 2007, you may also, if you wish invest 20% in respect of 2006, as long as you make the payment and submit your claim by 31 october 2007.

You could claim the Government SSIA incentive for 2006 or 2005 as your earnings are less than 50,000, but the releif at 42% is worth a good bit more to you.

The tax relief is granted at your marginal rate, 42% for 2006, 41% for 2007. PRSI relief is also available.

If your employer has appointed a PRSA provider (which they should have since you have no occupational pension) then you could make the payments via payroll and recieve your tax relief automatically. Otherwise invest your money and submit your P60 and the receipt to the Revenue who will issue a tax refund or adjust your credits. You can claim the PRSI relief from The Collector Generals Office in Limerick.

 

[geecee]

Hi All
Would really appreciate a response from somebody on this one...
I have been told conflicting stories by those "in the know" in work!

Can put: 46,500 (my salary) *20%= 9300 into a new PRSA as an AVC

Then I can claim all of this 9300 * 0.42 = 3906 back against my tax for 2006?
And get this back as by cheque from the revenue commessioners?

Thanks again!

 

[ClubMan]

Hi All
Would really appreciate a response from somebody on this one...
I have been told conflicting stories by those "in the know" in work!

Can put: 46,500 (my salary) *20%= 9300 into a new PRSA as an AVC

Then I can claim all of this 9300 * 0.42 = 3906 back against my tax for 2006?
And get this back as by cheque from the revenue commessioners?

Thanks again!

If you are aged 30-40 and have not already used up any of your 2006 pension tax relief limit then that is true. See here:

October 31 - what does it mean for PAYE worker?

And don't forget that you can also separately claim back PRSI/health levy deductions giving a maximum possible relief of 42% tax + 6% PRSI/health levy.

Claiming PRSI relief on standalone PRSA contribution