Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

This is a massive tax loophole that was created by his predecessor as Minister, Deputy Donohoe. It remains in our tax code despite it being pointed out to Ministers. Limiting the amount that can be contributed to a pension with full tax relief in a single year is crucial to ensure equity in our tax system, to control revenue and to prevent abuse. The changes made by the Minister, Deputy Donohoe, undermined all of those objectives. Previously, employer contributions to PRSAs were subject to income tax and USC. While a portion of those contributions could receive tax relief under the age-related percentage limit – something the Minister, Deputy Donohoe, wrongly denied at the time, this is no longer the case. Now a company director can put more than €2 million into a PRSA pension without incurring any tax whatsoever. Company directors can even avail of corporation tax relief on this contribution, providing what is being widely advertised in the industry as a tax-efficient way of extracting profits from the company and converting it into personal wealth. They can game this loophole further by employing a relative on a low salary and transferring up to €2 million from the company tax free to a PRSA on their behalf.

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