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Revenue Clarify Calculation of Tax Deductible Pension Contributions for Doctors
by Kieran Kennelly

The Revenue Commissioners’ Tax Briefings 74 and 79 set out guidance in relation to the application of the earnings limit (€150,000 from 2009) to income tax relief for pension contributions for those who have both employed earnings and self-employed profits and make contributions to both an occupational pension scheme and a personal pension plan.

The guidance indicated that where a taxpayer is contractually obliged to make a pension contribution to an occupational scheme and their earnings from the employment reach or exceed the limit of €150,000 then contributions into the personal pension plan will not qualify for tax relief.  The €150,000 earnings limit is already “used up” as it were.  The taxpayer may however have scope to make AVC’s to avail of full relief on the €150,000. 

Revenue have clarified in Tax Briefing 11 that Section 773 TCA 1997 treats doctor’s GMS income as “remuneration from an office or employment”. Therefore the operation of the aggregate earnings limit would apply to doctors with GMS and private practice income. Revenue have indicated certain transitional arrangements for doctors with GMS and private practice income.

Where a personal pension / PRSA contract was entered into before 7 September 2010 and the contribution was paid in 2009 or where it was paid before 7 September 2010 in respect of 2009 Revenue will not seek to apply the approach in Tax Briefing 11. 

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