Pension loophole was exploited to wipe out tax bills, Revenue found

The paper said the link between salary and pension had been completely “broken” and the system left open for large scale abuse by the wealthy.

The internal report, prepared by a Revenue official, said “a number of tax loopholes” had inadvertently been introduced because of the 2022 Finance Act.

It said there had always been room for individuals to increase personal wealth through clever use of pension schemes, but this had been super-charged by the loophole.

The paper said it allowed for “funding at an unlimited level” for family members or spouses artificially employed on low salaries and short contracts.

It said: “In effect, some self-employed professionals could wipe out their own tax liability on their professional income by a sufficiently large tax deductible Personal Retirement Savings Account (PRSA) contribution for their employed spouse.”

The Revenue report said the original plan had been to bring equality to different pension schemes and to encourage PRSA…