A
Amilo
Guest
My wife and I are jointly assessed for tax. She paid the marginal rate of tax on just over €5k of her income in 2005 and made an AVC for this amount into her pension scheme just before the 31st October 2006 deadline.
She was on a maternity leave in 2006 and consequently only had to pay the marginal rate of tax on about €1.5k of her income. She returned to work at the beginning of this year but has gone part time and accordingly none of her income will be taxed at the marginal rate i.e. she will earn less than the uplift of €25k.
She was considering doubling her regular 5% of salary pension contributions to 10% through a regular 5% AVC contribution. Obviously she’d only receive tax relief at the standard rate plus PRSI under net pay arrangements.
However, when she received the tax rebate of €2.1k from Revenue in respect of the 2005 lump sum AVC (she still waiting on the PRSI refund but has been assured its on the way), the balancing statement recorded that I had made the €5k AVC. Is this just presentation or can tax relief be claimed at the marginal rate on any lump sum AVC made to my wife’s pension scheme as everything I earn above €43k will be taxed at the marginal rate? If this is correct it would obviously make much more sense to make a lump sum AVC contribution of 5% of my wife’s salary at the end of 2007 rather than going through a regular net pay arrangement.
She was on a maternity leave in 2006 and consequently only had to pay the marginal rate of tax on about €1.5k of her income. She returned to work at the beginning of this year but has gone part time and accordingly none of her income will be taxed at the marginal rate i.e. she will earn less than the uplift of €25k.
She was considering doubling her regular 5% of salary pension contributions to 10% through a regular 5% AVC contribution. Obviously she’d only receive tax relief at the standard rate plus PRSI under net pay arrangements.
However, when she received the tax rebate of €2.1k from Revenue in respect of the 2005 lump sum AVC (she still waiting on the PRSI refund but has been assured its on the way), the balancing statement recorded that I had made the €5k AVC. Is this just presentation or can tax relief be claimed at the marginal rate on any lump sum AVC made to my wife’s pension scheme as everything I earn above €43k will be taxed at the marginal rate? If this is correct it would obviously make much more sense to make a lump sum AVC contribution of 5% of my wife’s salary at the end of 2007 rather than going through a regular net pay arrangement.