Revenue Note for Guidance

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Revenue Note for Guidance

848Z Tax credits

Summary

This section sets out how the tax credit and additional tax credit payable to an eligible individual under this Part are to be calculated.

Details

Tax credit

(1) The Exchequer will add €1 for every €3 subscribed by the individual, up to a maximum addition of €2,500 (i.e. only the first €7,500 subscribed will be eligible for this credit (called a “tax credit”)).

Additional tax credit

(2) Secondly, the Exchequer will also add a proportion of the tax deducted from the individual’s SSIA on its maturity. This is called an “additional tax credit” and is calculated as follows:

(3) The additional tax credit is:

A × C

B

where—

A

is the maturity tax in relation to the individual’s SSIA,

B

is the net funds in relation to the individual’s SSIA, and

C

is the amount of the pension subscription.

Example

Mr. O’Shea’s SSIA matured on 31 January 2007. €300 maturity tax was deducted, leaving net funds of €17,200. On 1 February 2007 he subscribed €15,000 of those net SSIA funds to a pension product. His pension provider made a claim to Revenue for the following amount of tax credits:

The tax credit (€1 for €3) up to a maximum of €2,500

€2,500

and

the additional tax credit (using the formula in subsection (3)) being—

300×15,000

= €261.63, which can be rounded up to

17,200

€262

giving a total amount of tax credits, payable on 1 March 2007, of

€2,762

Relevant Date: Finance Act 2021