Dominic Coyle answers your queries
Conflicting advice on SSIA 'holiday'
I would really appreciate if you could settle an issue for me. I have been given two conflicting pieces of information regarding the maturity date of my SSIA deposit account by AIB. I started the account on April 22nd, 2002.
I travelled to Australia for nine months (May 2003 - January 2004) and was advised (verbally) by AIB in Kenmare to put my account "on ice" in order to "save" the nine months - ie, I was given to understand that when I came back to Ireland I would recommence payments and effectively add the nine months on to May 2007. Therefore I would be paying into my account until January 2008. My SSIA account would therefore mature in February 2008.
I have now been told by AIB (call centre help desk) that my account will mature in May 2007, 61 months total and that "unfortunately" I was given the wrong advice by AIB in Kenmare.
I would like to maximise the potential of my SSIA account and would appreciate your opinion on this issue!
Ms T O'S, Kerry
I regret to say that the original "verbal" advice you say you were given by AIB's Kenmare branch was poor in the extreme. More significantly, there is no way to repair the damage to your investment as a result of that advice - especially as it was verbal and you have no written proof to present against the bank.
The only saving grace in your case is that you did not take this advice within the first year of your Special Savings Incentive Account. If that had been the case, the account would have been closed automatically and you would have got nothing.
As it is, there is no provision for you to extend the term of your SSIA to make up for the period that the account was frozen. The SSIA scheme is expressly stated to run for five years - no more.
There was nothing to stop you continuing to pay into your SSIA account while you were away - even at a reduced level if you did not have the same income stream - but, having missed those monthly payments, there is no way to make it up. As you have since been told by AIB's call centre help desk, your account will close either in April or May 2007, depending on when the first payment was made.
The rules state that the account closes at the end of the month in which the fifth anniversary falls - the date the first payment is lodged to it, not the date on which you actually signed the forms.
While it is good to hear that at least the call centre help desk is on the ball, your case is yet another example of the way customers of financial institutions are losing out simply because the institutions cannot or will not invest in training their staff. The SSIA scheme is not that difficult to understand in the context of financial services products and, while the rules were quite clear on the ability of people to take a payments holiday after the first full year of contributions were made, I am at a loss to understand how any bank official could have imagined there was a facility to add such a holiday period back on to the end of the term. Unfortunately for you, you will pay the price for that mistake.
Tax on share sale
Can you advise on how I should calculate the tax due on shares that I sold. I made a loss on some and a gain on others. One way seems correct and fair; the other does not but that doesn't mean the taxman would agree. Setting personal allowances aside for simplicity purposes.
a) I have lost €5,000 on the sale of shares and made €10,000 on the sale of others. I can deduct the loss from the gain and pay 20 per cent tax on the €5,000 or €1,000. This, however, means, that I have only recovered 20 per cent of my lost €5,000 and still I'm paying tax.
b) I can assess the tax on the €10,000 gain, which is €2,000 and deduct this from my €5,000 loss, leaving a loss of €3,000 to be carried forward. If there is no gain there should be no tax due
Is there a self-assessment booklet on this subject?
Mr E O'B, Dublin.
I can see the attraction of plan B but, as I think you suspect yourself, the Revenue will certainly approach assessment of capital gains due on your transactions on the basis of plan A. The object of the capital gains tax regime is not to ensure that an investor never suffers a loss.
The Revenue allows you to offset losses in any one year against gains made in that same year - in your case the €5,000 loss is offset against the €10,000 gain, leaving you with a net gain for the year of €5,000.
As you point out, this will leave you with a tax bill for €1,000 on the basis of the 20 per cent capital gains tax rate - leaving aside the issue of expenses incurred in acquiring/disposing of the shares and your personal capital gains tax allowance in any given year.
The only time you can carry losses forward is if the losses in one year are greater than the gains made in that same year - for instance if you lost €10,000 on one transaction and made €5,000 on another. In that event, the net loss for the year is €5,000, there is no tax bill and you carry forward the outstanding loss of €5,000 to set against gains in subsequent years until the loss has been fully offset by gains.
The Revenue produces a booklet on the subject that can be downloaded from its website.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 10-16 D'Olier Street, Dublin 2 or by e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice.
