I was employed by Apple about 20 years ago. I received a number of free shares during this period. In 2000, I sold 38 shares and received $3,800 for them.
I am anxious to meet my obligation in regard to disclosing any foreign assets held by me. I have made a disclosure to Revenue regarding my liability and promised to follow up with payment.
This is where I need some advice. I have read through the FAQs section on the Revenue site and looked at the "Estimator" tool which is adding on nearly 90 per cent in interest and 10 per cent penalty despite my liability being under the €6,000 rule. Can that be accurate, nearly 98 per cent charge on the initial gain?
I’m also not sure whether my liability should be calculated under the PAYE of CGT tool.
Where can I find the dollar to Irish punt rate exchange rate for January 2000? Revenue only goes back to 2002. What was the capital gains allowance for that period?
Finally, do I need to disclose the balance of my shareholdings which remain held on my behalf by a stockbroker firm in the United States on which I pay an inactivity fee of $50 each year.
No shares have been sold since 2000. I discovered in the last week that my shareholding has now increased despite my leaving the company many years ago. I have no idea where these shares have come from and whether they have been allocated to me in error.
I am in contact with the company and have asked them to further investigate the matter. Until I receive a response, I cannot accurately disclose a figure for my holdings. Any advice you can give me would be greatly appreciated.
Ms A.F., email
When tax liabilities date back a long time, getting a precise fix on what is owed can be a very difficult process. If you include a currency transition like Ireland’s move to the euro, it complicates things still further.
But, when you’re dealing with the Revenue, you’re quite correct in thinking it’s worth the time to do so. It appears from your letter that Revenue has given you a little time to ensure you have the facts right, which is encouraging.
First things first. These were shares given to you for free during your employment with the company. I assume that was under an approved profit-sharing scheme, which allows staff to benefit from free shares up to a certain annual limit without them being considered benefit in kind and subject to income tax.
There are rules about such schemes, key among them that the shares are held for you in trust by the company for a period of three years. Assuming that was the case, the issue for you is capital gains tax and not income tax.
So what would your position be on capital gains? Well under approved profit sharing schemes, after the lock-in period, you would be liable to capital gains on the difference between the market price of the shares on the date you first received them and the price and which you subsequently sold them.
You know what you got when you sold them but you will now have to go back and find out what the price was when they were first allocated to you through the profit-sharing scheme.
Payment
Then, of course, you've to translate the figures from dollars – in which the shares traded and in which you received the payment after their sale – and Irish punts, as our currency then was. There are a couple of sites that will have this data going back that far even for disappeared currencies like the punt, including www.poundsterlinglive.comwhich uses Bank of England historical data.
Once you’ve done that, you are entitled to a capital gains tax allowance which, back in 2000, was £1,000.
That should knock a hole in any liability. You still need to transfer the figure into euro to sort out any current liability. To do so, simply divide the punt figure by 0.787564.
Given the figure is below €6,000, you are exempt from penalties, which means you would need to discount that figure from any result thrown up by the Revenue Estimator. However, you are likely to face interest charges and, on liabilities going back to 2000, that would be in the region of 90 per cent of the original amount of tax due.
In relation to the balance of your shareholding which you still possess, you do not need to inform Revenue. However, you do need to declare any dividend income you receive.
While Apple shares traditionally paid no dividend, that has changed since 2012. Between 2012 and 2014, that amounted to between $2.65 and $3.29 a quarter per share (you should have notification of the precise amount; if not, it is available online). After 2014, dividends dropped back to between 47 and 63 US cents a quarter per share.
The sharp fall in dividend per share is down to share splits in Apple, which brings me to your final issue. The shares have split four times since the company went public.
Back in June 1987, the company executed a two-for-one split where shareholders got two new shares for every one originally held. That was before your time but, in June 2000, a similar two-for-one split occurred. This was repeated in February 2005 and, in June 2014, the company organised a seven-for-one split.
As a result, it is no surprise that the shares you retained when you left the company have since multiplied. For each of the shares you held on departing the company, you will now have either 14 or 28 shares, depending on whether your figure was post or pre the 2000 split.
At a current price of close to $153, that’s remains a handy investment. Do remember, if and when you go to sell them, that you are entitled to deduct costs, including the stockbroker’s inactivity charge, from any gain before determining your tax liability.
Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.
