Embed Size (px)
Citation preview
www.independent-trustee.com
THE ITC SSASBROCHURE
ITC SSAS
If you are in business you know that the road is seldom smooth. It can be difficult to plan for a far-off retirement when you have immediate and pressing business financing needs. Many business people treat their business as their retirement asset and, by the time it is paying its way, they are a lot closer to retirement than they might wish and the pension question begins to loom large. The good news is it is seldom too late to avail of the tremendous tax advantages offered by investing in a pension scheme.
An ITC Small Self-Administered Scheme (SSAS) is an extremely flexible arrangement that allows you the facility of:
• Providingforanincomeinretirement
• Reducingbothcorporateandpersonaltaxes
• Extractingfundsfromacompanywithoutanyincometaxliability
• Potentiallytransferringassetstoyournextofkin
And an ITC SSAS is not just attractive from a business owner perspective, it is an efficient and powerful way to reward and retain key employees.
What is a Small Self-Administered Scheme (SSAS)?A SSAS is known by a variety of names including Self-Administered Pension (SAP) and Self-Directed Trust. It is a tax-efficient investment scheme, suitable for both controlling directors and employees, allowing the holder to enjoy the greatest level of control over the direction of their investments.
An ITC SSAS also offers the greatest level of flexibility in respect of contributions. There are no obligations to make regular contributions to an ITC SSAS nor are there any penalties imposed if further contributions are not made.
What is the difference between a SSAS and a regular pension product?If you invest in an insurance company pension product, you must choose from the fund options available under that contract. An ITC SSAS will allow you to avail of all of the benefits of the pension structure without the obligation to invest in specific funds. It is possible to hold individual properties, land, deposits, equities and a variety of other investments directly in your scheme. You may also make significantly greater contributions to your SSAS than to a personal where contributions are limited by maximum relevant earnings thresholds.
Your future. Our focus.
page 2 of 8
The ITC SSAS
page 3 of 8page 3 of 8
What are the tax benefits associated with an ITC SSAS?An ITC SSAS has all the tax benefits of regular pension plans. Contributions enjoy personal tax relief and / or corporation tax relief. Returns are exempt from income tax and capital gains tax.
A certain portion - typically 25% of the value of the investment - may be taken tax-free at retirement and the balance of the fund may be invested in a manner which similarly enjoys income tax and capital gains tax exemption subject to certain conditions.
How much can I contribute to my ITC SSAS?The amount that you can contribute or that can be contributed on your behalf by your employer depends largely on your age and salary.
For example, if you are aged 50 and earning an annual salary of €150,000, an annual contribution of approximately €373,000 between yourself and your employer is possible. Your own contributions are based on a scale of 15% to 40% of your salary to a maximum salary of €254,000 (indexed from 2007).
What are the costs associated with an ITC SSAS?The cost of setting up and managing your ITC SSAS is met by fees which are typically paid by your company and are fully tax-deductible.
The ongoing cost of an SSAS is fully transparent and depends on your investment strategy. When you control the direction of your investment, you also have the power to manage the costs associated with these investments.
Who can set up an ITC SSAS?An ITC SSAS is suitable for employees and salaried directors. It is most suitable for owner directors and should be the number one choice for retirement planning.
How does an ITC SSAS benefit proprietary directors?Proprietary Directors will generally have thepower to divert profits from a company into their schemes. An ITC SSAS is the most tax efficient way to transfer company profits into personal capital.
The ITC SSAS
page 4 of 8
• Contributionsfromthecompanytotheschemeare tax-deductible in the company accounts
• There is no tax liability in respect of thesecontributions
• Allincomegeneratedbytheschemeisfreefromincome tax
• All capital growth in the scheme is free fromcapital gains tax
All funds are held in trust for the investor. Once invested in the scheme they no longer form part of the assets of the company.
What happens at retirement?At retirement, Proprietary Directors may chooseto purchase an annuity which will guarantee an income for life, or to invest in a personally-owned Approved Retirement Fund. Investments within an Approved Retirement Fund continue to enjoy income generated free of income tax and capital appreciation gained free of capital gains tax. Income tax is liable on any amounts drawn down from the fund.
See our ARF brochure for more information on Approved Retirement Funds.
Warning: If you invest in this product you will not have access to your money until you retire.
What are the benefits of an ITC SSAS for employees?A ITC SSAS can bring major benefits for employees, particularly in relation to tax efficiency.
Example:An employer is considering giving an employee (aged 45) a discretionary bonus of €50,000. The employee will pay tax at the top rate of tax if the bonus is paid as a salary, alternatively the employer can contribute the €50,000 to an ITC SSAS. Which is the best option?
Warning: The value of your pension investment may go down as well as up. You may get back less than you invest.
Salary SSAS
€50,000 Initial Amount €50,000
€22,000* Less PAYE & PRSI nil
€28,000 Amount Invested €50,000
€85,468 Growth @ 8% p.a.** €152,621
At age 60 the employee is €67,153 better off with the SSAS option.
* based on the lower rate of tax.**The growth rate is for illustrative purposes only and is not based on a specific index.
Warning: These figures are estimates only. They are not a reliable guide to the future performance of your investment.
What are the benefits of an ITC SSAS from a company perspective?The benefits to a company are numerous:
• Full corporation tax relief within Revenue limitson company contributions to the scheme, thereby reducing the current year’s corporation tax liability
• Retained profits can be transferred to thescheme for the benefit of an individual
• Powerfulpositiveeffectonemployeeloyalty
• Abilitytovarycontributionstosuitthecompany’saccounts and cashflow
• Abilitytofacilitateefficientbusinessexitandtheorderly transfer of control from retiring directors to incumbents
What happens if you die before retirement?In the event of your untimely death a lump sum of up to 4 times your salary can be paid to your estate tax free. In some cases this may absorb the full value of the fund. An annual income for dependents will be purchased with any surplus monies in the fund.
The ITC SSAS
page 5 of 8
Is it possible for my ITC SSAS to borrow to invest?Provisions contained in Finance Act 2004 nowallow a SSAS to borrow to invest for your benefit.
How do you go about investing in an ITC SSAS?Step 1 Contact your Financial Advisor
Step 2 Your advisor will gather the required information which will allow Independent Trustee Company Ltd to draw up a trust document.
Step 3 The document is signed by you and returned together with a mandate to open an operating bank account for your ITC SSAS.
Step 4 ITC applies to the Revenue Commissioners for the scheme to receive tax exempt status.
Step 5 Your company can transfer the required funds tot he operating bank account. Transfers out of the bank account require your signature and authority from ITC.
Step 6 Now you can begin investing!
The ITC SSAS
page 6 of 8
The ITC SSAS
page 7 of 8
Independent Trustee Company Limited, part of the ITC Group, is regulated by the Central Bank of Ireland.
Pleasenotethattheprovisionofthisproductorservicedoesnotrequirelicensing,authorisation,orregistrationwiththeCentralBankofIrelandand, as a result, it is not covered by the Central Bank’s requirements designed to protect consumers or by a statutory compensation scheme.
SA 100.2.0Effective from March 2016
Independent Trustee Company Limited Harmony Court Harmony Row Dublin 2
Tel: (01) 661 1022 Fax: (01) 661 1024 Email: [email protected]
Independent Trustee Company Limited is regulated by the Financial Regulator.
ITC does not take any responsibility for loss or damage occasioned by any person acting or refraining from acting as a result of the contents of this brochure. This brochure is based on ITC’s current understanding of pensions law and revenue practice as at October 2007.
Registered in Ireland under Company Number 214999. Registered Office: Harmony Court, Harmony Row, Dublin 2. Vat Number IE 8214999
www.independent-trustee.com
Independent Trustee Company Limited,Harmony Court, Harmony Row, Dublin 2.
Tel: (01) 661 1022Fax: (01) 661 1024Email: [email protected]
Independent Trustee Company Limited is regulated by the Financial Regulator.
ITC does not take any responsibility for loss or damage occasioned by any person acting or refraining from acting as a result of the contents of this brochure. This brochure is based on ITC’s current understanding of pensions law and revenue practice as at October 2007.
Registered in Ireland under Company Number 214999. Registered Office: Harmony Court, Harmony Row, Dublin 2. Vat Number IE 8214999
www.independent-trustee.com
Independent Trustee Company Limited,Harmony Court, Harmony Row, Dublin 2.
Tel: (01) 661 1022Fax: (01) 661 1024Email: [email protected]
