Tax Efficient Investment Options for ARF Income

EIIS in ARF Pension

While the Approved Retirement Fund (ARF) distribution is compulsory, some clients who are in receipt of other income choose to invest the after tax ARF income to access it at a future date. We have been looking at tax efficient investment options for these clients and one option is the Employment and Investment Incentive Scheme (EIIS).

The Opportunity
The EIIS is a tax relief incentive scheme, which enables investors to deduct a portion of the cost of their qualifying investment from their total income for income tax purposes for investment in qualifying small to medium sized companies. EIIS is one of the few remaining sources of total income relief.   The maximum investment allowed is €150,000 per year.

EIIS tax relief is available in two tranches, an initial 30% in year one and a further 10% tax relief in year 4, on satisfying certain conditions.

How does the tax relief work?
John has an annual distribution from his ARF of €75,000. His other income funds his lifestyle and he is concerned that he has a significant tax liability on his ARF distribution.

As a result he chooses to invest  €60,000 in one or more EIIS investment companies in 2018. The cash flows and tax relief would then work as follows;

Tax Efficient Options for ARF

As we are not EIIS product producers, Harvest Financial Services Limited is uniquely placed to research the market to recommend the most appropriate investment opportunities for our clients and we currently have a number of interesting EIIS investments opportunities available. 
 
Please note that EIIS investment is a private equity investment and is considered a high risk investment. Your client manager will discuss the appropriateness of this investment with you before any investment is made.

To find out more about these EIIS investments please contact us on 01 2375500 or email justask@harvestfinancial.ie.

 

 

Warning: If you invest in this product you may lose some or all of the money you invest. This marketing information has been provided for discussion purposes only.  It is not advice and does not take into account the investment needs and objectives, financial position, risk attitude, liquidity needs, capital security needs and / or capacity for loss of any particular person.  It should not be relied upon to make investment decisions. The particular tax treatment contained herein is based on Harvest Financial Services Limited's understanding of current Revenue practice as at September 2018.  Please note that the tax treatment depends on the individual circumstances of each client and may be subject to change in the future.  You should take such independent tax advice as you deem appropriate.