Q&A: Q IN REPLY to a number of letters recently, you have said that the extension of the bank guarantee to 2013 is in the National Asset Management Agency (Nama) legislation. Now that this legislation has passed all stages, can you confirm that it is still included?
If the guarantee is not extended beyond next September, this could foster a degree of uncertainty, which could lead to a run on the banks in the lead-up to next September. People with money on term deposits maturing anytime between now and September will be reluctant to commit their cash for any term beyond next September, thus leading to large withdrawal of deposits. I would welcome your comments and clarification.
Mr DW, e-mail
AYou're quite right in saying people are looking for some security on the safety of their funds. We are now less than one year from the original guarantee endpoint – September 2010 – and that is making it difficult for people to feel confident in putting their money into term deposits.
Of course, you should remember that, even beyond the terms of the absolute guarantee, there is a €100,000 bank protection scheme threshold, below which your funds would be protected anyway.
On the more specific point of the promised extension of the guarantee to 2013, I understand that this will come by way of a statutory instrument. Originally, it was expected that this would come before the Dáil in October. However, the terms of any extension to the guarantee have to be cleared by the European Commission, which keeps an eye on the issue of state support and its effect on competition in the sector.
It is now expected that the statutory instrument will appear before the end of the year – certainly well before the end of the current bank guarantee scheme.
It is not yet clear what such an extension would cover, but term deposits certainly will be covered. Given the parlous state of most of our banks, there is little prospect of them selling term deposits without such a guarantee and, as the trading statements issued by the big three in recent weeks have reinforced, they are still desperate for funds from their customer base.
Q Can you please explain Crest? I put all my shares with Merrion on Crest, but it means I lose control. I never know what dividends I receive. Agms and attending cards are often missed. Can I have shares in Crest in my own name? What should I do?
Mr SF, Dublin
ACrest is part of a general move to phase out the use of paper share certificates. Stock exchanges around the world are moving to a situation where shares are held electronically. In general, there are two ways of doing this: through nominee accounts, where your shares are lumped in with those of other investors operating through the same stockbroker; and personal accounts, where the shares continue to be held in your name.
Crest is one of the methods of holding shares electronically. As I understand it, even within Crest you can hold shares as part of a nominee or sponsored account, or through Crest personal membership.
This latter form of Crest membership is the one that you are looking for and, as far as I am aware, it is available through most Irish brokers.
Under a Crest personal membership, you continue to have direct control over your investment. Your name will appear on the share register of the company as the owner of the stock, not just the name of your stockbroker. You will be the legal and beneficial owner of the shares.
You will receive directly, should you choose, any dividends paid by the companies in which you have invested – unlikely as such dividends might be in the current climate.
You will also receive copies of annual reports and information on upcoming annual and extraordinary general meetings, as well as information on rights issues and other events. In relation to agms and egms, you retain the right to attend and cast your own vote personally.
Communications in relation to all these issues should be sent to your address, provided you have dictated this on your membership application form.
You should approach your broker and ask to be switched to this form of Crest membership if you are subscribed to some other form of Crest membership.
If your broker cannot arrange this for you, there are plenty of others in the Irish market who will.
Q I am a PAYE taxpayer paying at the 41 per cent rate. I also have savings on which I receive interest, having paid Dirt. Do I have to regard this interest payment as income, and if so am I liable for additional tax? If this is so, can I use the “medical expenses/bin tags” mechanism to reconcile my tax affairs?
Mr DW, Dublin
AIn relation to bank interest, Deposit Interest Retention Tax (Dirt) is deemed to be full payment of your tax liability.
It is the case that on your tax return you might see a further tax liability on deposit interest, but you will also find an offsetting credit later on the same form.
The fact that you are paying income tax at the higher 41 per cent rate has no bearing on your liability for Dirt.
Separately, if you are due relief for medical expenses or local waste charges already paid, you should claim them back – if they have been incurred in the past four years.
Q I will reach 70 soon and I am about to apply for a medical card from the Health Service Executive. I am within the financial limits specified in the last budget. What I am anxious to know is what rate my GP will get under the medical card scheme?
When the Government tried to cancel the automatic entitlement for the over-70s at the end of last year, there was an outcry, and the Government climbed down on the matter. To me the Government planned the whole affair badly. If they asked people to pay their GPs, they would have saved themselves and the taxpayer millions.
I go to my GP about four times a year and this costs me about €200. I would be willing to continue to pay the €200 a year to my GP and not have the Government giving €600-plus to my GP for looking after me, and I could avail of drugs under the free drugs scheme only.
Ms MP, Dublin
AIt's not easy to pick and choose your entitlements to care under medical card schemes. State benefits simply would not be able to cater for the blend of people who can afford to pay certain charges.
For what it is worth, the annual fee payable to GPs in relation to people over 70 in possession of a medical card is €290. This figures was set out in the Finance Act following the first of last year’s two budgets.
You are correct that under the old scheme two figures applied: a sum of about €640 a year for those over 70 who had not been means tested, and just €130 or so for those who had gone through a means test. But this is no longer the case.
Bear in mind that, as you age, it is likely that you may need to see your GP more rather than less.
Please send your queries to Dominic Coyle, QA, The Irish Times, 24-28 Tara Street, Dublin 2, or by e-mail to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering questions. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.
