Revenue Precedents

While the question of taxation of the emoluments is a matter for the appropriate District dealing with the employees, any arrangement under which an employee waived an entitlement to remuneration (salary sacrifice) or accepted a reduction in remuneration in return for a corresponding payment by the employer into the pension scheme to enhance the employees pension benefits would be regarded as an application of the employees income. PREC/31

All employee contributions do not qualify for PRSI relief. Purely as a consequence of the operation of the net pay arrangement the ordinary annual contribution is relieved from PRSI. Special Contributions (those paid directly by the employee to the scheme) do not qualify for PRSI relief. PREC/27

A residual Widows /Widowers/Dependant pension can only be commuted when they come into payment. PREC/19

Normal Retirement ages from age 55 are acceptable for firemen. PREC

Irish Insurance Companies can appoint foreign fund managers who are resident in EU States. PREC/29

A scheme capable of approval can be established after the point of retirement but only to the extent that it provides for benefits for the ex-employee in a non commutable form. PREC/20

If the individual would be resident in the UK subsequent to termination of service then funds can be transferred to a UK buy out bond PREC/10

Tax free lump sums in commutation of foreign pensions are not taxable in Ireland should the individual come to reside in this country following their retirement. PREC/28

In the case of Directors engaged as moneybroker/dealers or as managers responsible for such dealers, normal retirement age of 55 and upwards is acceptable. PREC

Normal Retirement age can be later than 70 only where it is customary for employees in a particular occupation to retire at an age later than 70. PREC

Contributions paid during absence on career break to be treated as “special contributions” and allowable on a spread forward basis .Thus, relief becomes available when the individual re-commences the employment. PREC/22

Where an insurance company has undertaken to continue to pay long term disability payments in cases where employments have been effectively terminated then there will be no Revenue objection to the continuation of those members in the employers pension scheme, and for the continuation of appropriate funding through the relevant amounts received for such purposes under the disability scheme. PREC/21

Advance payments of contributions which are due and payable in subsequent accounting periods should be disallowed. Neither can they be treated as special contributions and spread forward, as such special contributions are only allowable to fund for past service or to augment benefits already secured or to make up an actuarial deficiency. PREC/24

Revenue Practice would not permit the splitting of member’s total benefits so that part of such benefits would be dealt with by a transfer payment and a part held by the trustees of the scheme as a deferred benefit. PREC

The provisions in Practice Note 4.4 apply to one man insured arrangements only and not one member schemes. PREC/23

An employer can make further contributions to a scheme after benefits for ex-employee have been transferred to a buy out bond, if within approvable limits, and it is likely that the maximum approvable lump sum element of benefits would be taken from the buy out bond, the further benefits arising would need to be in pension form only. PREC/11

A non-Irish national seconded to work in Ireland can remain in his home country scheme and get relief from Irish tax on his contributions to that scheme, provided that the secondment here is for a period of less than 10 years, the scheme is a trust scheme, and the benefits to be provided by the overseas scheme are within Irish approval limits. PREC/30

Tax relief may be granted on contributions made by employees on or shortly after leaving service. This is intended to cater for special circumstances where there might be an unavoidable delay in the employee making a special contribution, for example, in many public sector schemes retiring employees have deductions made from lump sums to pay for spouses benefits which qualify for relief. Strictly speaking contributions should only be paid by “employees” and not ex-employees. PREC/26

Remuneration for pension purposes is not reduced by virtue of the deduction for income earned outside the State (Sec 823 TCA). The remuneration figure on which benefits are based is the remuneration before the deduction for income earned abroad (excluding the United Kingdom). PREC

An employer can make payments to employees to compensate for changes in the benefit structure of a pension scheme free of tax, if the situation is a bone fide one, for example, arising out of Labour Relations recommendation and ultimately a Labour Court ruling. Each case would have to be judged on its merits. PREC/32

The following may be included for final remuneration purposes in fluctuating emoluments: benefits in kind chargeable under section 118 TCA, expenses allowances chargeable under section 117 TCA, preferential loans chargeable under section 112 TCA (net amount after interest relief), share options/share participation schemes chargeable under section 128 TCA ( only the amount actually charged ). PREC

The restrictions outlined in Practice Notes 9.3 and 9.4 do not apply in cases where benefits are deferred to Normal Retirement Age. PREC/9