Q&A:I bought shares in Planestation Group plc back in 2001. In January 2007, I received a letter from Grant Thornton informing me that the company had been put into liquidation in July 2006 and that the shares had no value. My total investment was €31,944.
This year, I expect to have a large capital gains bill due to a property sale. Can I offset my losses on Planestation plc against this capital gains bill? How do I compute the offset?
In March 2000, I invested €25,394 in an Irish Life Scope investment. At September 2006, it was worth €9,733. If I cash in these units, can I also offset my losses against the capital gains tax bill? Would this be tax efficient?
BG, Dublin
Planestation, the airport owner that invested in and ultimately took over the Irish low-cost carrier EUJet, went into a tailspin when its bank - Halifax Bank of Scotland - said it would not put any further funds at the group's disposal in mid-2005.
Ultimately the group went into liquidation and you, among others, found yourself out of pocket. As Grant Thornton states, your €31,944 holding is worthless.
Where this sobering experience will prove of some benefit is in offsetting at least some of the capital gains tax bill you expect to face this year.
Capital gains tax rules provide that capital losses are set against future gains until they are fully offset. There is no time limit, nor are you confined to offsetting losses on equities against other gains on equities. the losses on the Planestation deal can be offset against any capital gains liability.
Unfortunately, the same is not true of your underperforming investment in the Irish Life fund. This is because such funds come under the income tax code rather than the capital gains regime.
If the Irish Life investment had yielded a profit, it would have been taxed annually at the lower income tax rate (under the old net funds regime) or at the lower rate plus three percentage points rule - effectively 23 per cent - upon drawdown under the more recent gross roll-up funds regime.
Those gross funds have only been in operation in Ireland for the past five years, so I imagine the net regime applies to your investment.
In any case, there is no provision permitting you to offset losses on such a unitised investment against capital gains. That being so, you might well want to leave the money in situ to see if Irish Life can resuscitate your investment.
Cowen 'bonus'
As a pensioner, I have twice approached my bank (Bank of Ireland) about transferring some of my matured SSIA into a PRSA and availing of the Cowen "bonus". Each time, my manager has insisted that I am not allowed to do so. I notice you have stressed several times that this is not so. Despite showing a cutting to my manager, he continues to tell me that the incentive does not apply to people like me.
I am under 75 and my income last year was below the €50,000 limit but it is now more than three months since my SSIA matured. What is my position?
DH, Cork
Your position is that you are out of pocket to the tune of at least €2,500 because of crass misinformation from a senior bank official who should know better. The Cowen incentive - where you get €1 for every €43 invested from an SSIA into a pension up to a maximum bonus of €2,500 - applies only to funds transferred within three months of maturity.
I would write to your manager pointing out that his advice contradicts the position of the Department of Finance and the Revenue. I would demand that the bank immediately compensate you - at least for the €2,500 on which you have lost out as well as the 23 per cent exit tax that you would have been refunded on amounts invested in a pension.
If you do not get immediate satisfaction, I would take your case to the Financial Services Ombudsman. This is a black and white issue and you are owed money.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2 or e-mail to dcoyle@irish- times.ie. This column is a reader service and is not intended to replace professional advice.
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