The special additional once-off contribution to the employer pension scheme is €100,000. How much of this will qualify for corporation tax relief in the accounting period in which it is paid?

The special additional once-off contribution to the employer pension scheme is €100,000. How much of this will qualify for corporation tax relief in the accounting period in which it is paid?

• A. Nil
• B. €6,350
• C. €93,650
• D. €100,000

Answer: (D)

The key idea is that employer contributions to an approved pension scheme are a deductible expense for corporation tax in the period they are paid. If the contribution is made in the accounting period and the scheme is approved, the full amount qualifies for relief in that period. So, a one-off €100,000 payment is deductible in its entirety in that period, reducing taxable profits by the full €100,000. The other figures would only apply if there were restrictions not stated here (e.g., non-approved scheme or separate caps), which aren’t indicated in the question.

The key idea is that employer contributions to an approved pension scheme are a deductible expense for corporation tax in the period they are paid. If the contribution is made in the accounting period and the scheme is approved, the full amount qualifies for relief in that period. So, a one-off €100,000 payment is deductible in its entirety in that period, reducing taxable profits by the full €100,000. The other figures would only apply if there were restrictions not stated here (e.g., non-approved scheme or separate caps), which aren’t indicated in the question.