In last week's column you described the tax liable on the sale of shares, leaving aside the expenses incurred in acquiring/disposing of the shares. What can be regarded as such expenses?
To give you an example, I bought 150 Jurys Doyle shares in March 2004 at €10.05 a share. The stamp duty was €15.08 and the commission €32. These shares were sold to JDH Acquisitions in November last, at €18.90 a share.
Is the following the correct calculation of my tax liability for 2005, where this was my only share sale and capital gain?
Total purchase price: €1,507.50
Total sale price: €2,835.00
Gain: €1,327.50
Expenses: €47.08
Total gain: €1,280.42
Personal allowance: €1,270.00
Tax owed: €2.08
Mr WB, Dublin
You have got it right in your calculations. The simple rule is that expenses incurred in transactions to acquire or sell the asset can be deducted from the absolute gain before arriving at the taxable gain.
In the case of the buying and selling of stocks, this includes any commission paid to stockbrokers and the stamp duty levied on the transaction. If you were assessing capital gains on a property, you could include estate agent's fees and advertising costs.
Once you deduct allowable expenses, you subtract your annual capital gains tax allowance from the outstanding sum leaving you, in this case, with a taxable gain of €10.42 and a tax bill of €2.08 - assuming this was your only gain last year.
The final relevant point is the date by which you are supposed to settle any capital gains bill. Capital gains tax due on transactions concluded by September 30th must be paid to the Revenue by October 31st (or November 17th for those filing by ROS, Revenue's online system).
For business conducted in the rest of the year, such as the JDH Acquisitions deal for Jurys, any tax payable is due by January 31st of the succeeding year - a couple of months ago in your case, though I cannot imagine the Revenue going to war over €2.
SSIA holiday
Your correspondent (Ms T O'S, Kerry) last week doesn't state the amount she is paying into the scheme. As far as I am aware, an SSIA account holder can change the amount of their contribution twice a year during the lifetime of the scheme.
Mr TL, e-mail
Quite correct. Ms T O'S, or anyone else in a position to do so, should be maximising their contributions to special savings incentive accounts as they come to a close as, proportionately, later contributions are more valuable.
Certainly, they may mitigate Ms T O'S's losses as a result of the incorrect advice that she could freeze her account while away for nine months and add that period to the end of her five-year term.
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.
