Dominic Coyleanswers your questions

Still waiting for Ryanair share deal

In mid-December, Ryanair held an egm to approve two new shares for every one share held. As a result, I would have expected the share price to become €3-€3.50 but it has remained around the €10 price.

Could you explain what has happened and advise when existing shareholders will be receiving their bonus share certificates.

Mr D.McC., Dublin

There was an extraordinary general meeting of Ryanair plc in December, just around the time it became evident that the airline would fail, for the time being anyway, in its pursuit of Aer Lingus. You are correct when you state that the meeting voted to approve the issue of two new shares for every one share held.

However, these are not bonus shares. Remember, this is Michael O'Leary's Ryanair we are talking about - the original no-frills investment. To be fair, the performance of the shares has been such that investors can have little complaint, even after the still puzzling Aer Lingus adventure. What did happen was a share split - where each of the existing shares is divided - in this case in two.

Thus the nominal value of each of the shares you will hold after the share split comes into force will be half the face value of the shares before the split.

Companies proposing share splits normally are looking to increase the liquidity of the stock. In general, if the price of a unit of stock - a share - becomes too high, certain investors will shy away from it. As you note, Ryanair's shares have been above the €10 threshold since mid-December.

While a two-for-one share split should logically see the stock price of a listed company halve, quite often the increased liquidity will see the share price advance.

As to the timing of the split - and the subsequent issue of new share certificates to existing shareholders - that is not yet determined. The egm decided only that it would take place in the first quarter of 2007 and that a further announcement would be made when the company had decided on a definite date to carry out the exercise. You can expect more details over the next couple of months.

Dirt relief

My wife is 65 years old and any investment products we hold are in joint names. My gross salary from my pension last year was €31,877.00. From financial products that matured last year, and which were taxed at 23%, €4,508.86 was handed over to the Revenue. This figure included my SSIA Retention.

Tax of €530.35 from our bank account was also handed over, making it a total of €5,039.21. As my wife is 65 years, are we entitled to claim back any of this money?

Also if a person is non-resident and working full-time abroad, as my son is, is he entitled to claim back the Dirt taken from his account here in Ireland?

Mr J.O'B., Dublin

Taking the last point first, if your son is not resident in Ireland, he is entitled to hold a non-resident account - which would be free of Deposit Interest Retention Tax (Dirt). These, of course, are the accounts that caused such fuss with the Revenue when it turned out that large numbers of account holders were, in fact, resident in the State and merely using the accounts as a tax dodge. Still, they are perfectly valid products for people who are not resident and your son should contact his bank about changing the status of his account. Be aware that some banks are insisting on minimum balances in such accounts to justify the increased monitoring costs post the Revenue crackdown.

Returning to your earlier points, there are provisions for certain people to claim relief from Dirt on bank deposit interest. Basically, either you or your spouse needs to be aged 65 or over, which is a requirement under which you would qualify.

However, your income also needs to fall below the income exemption limit, ie the level at which you start to pay income tax. For a person under 65, like you, this level is just €5,210; the threshold for a person aged 65 or over is €19,000. In both cases, these thresholds are doubled for the combined income of a married couple. Now the key point is whether you qualify for the higher exemption for people aged 65 or over even though you yourself are below that age. My information is that, for married couples who are jointly assessed, the higher threshold applies if either spouse is aged 65 or over. On this basis, you qualify.

Minister for Finance Brian Cowen announced plans in his recent budget to automate such relief so that, rather than having to reclaim Dirt already deducted from interest, eligible accounts would be earmarked and no Dirt taken in the first place. It is intended to implement this new regime sometime this year.

Away from Dirt, there is no relief on grounds of age or income from exit tax on maturing financial products in general. However, when it comes to your SSIA, you can avoid the 23 per cent tax on the interest/investment gain by moving the matured SSIA funds into a pension product.

Mr Cowen announced in the 2007 Finance Act that tax would be waived on any of the funds transferred within three months of maturity to a pension fund.

On your income level, the Government is also paying a bonus of €1 for every €43 invested from an SSIA into a pension fund up to a maximum bonus of €2,500.

Irish Nationwide

Much was made during 2006 of the possibility of the Irish Nationwide Building Society demutualising, but no reference to this has been made for some time. Can you please bring me up to date with any progress which has been made?

Mr F.E., Dublin

It's all gone strangely quiet on the Irish Nationwide front in recent months. Having spent years lobbying Government to change the rules so that the building society could be sold off speedily, Michael Fingleton appears to be taking his time in deciding with which suitor he should tie the knot.

The Building Societies (Amendment) Act 2006 was formally signed into law last July. This legislation facilitates Mr Fingleton's preference to effectively demutualise through a trade sale.

It is understood that a number of financial institutions have been running the rule over the society. It will only be at the point that one of these actually takes over the Irish Nationwide that windfalls of up to €15,000 per member will be triggered.

Members who have waited a long time for these promised windfalls could be forgiven for adopting a sceptical approach, but the likelihood is that the payments will come in 2007. After all, Mr Fingleton and his fellow executives would not relish having to turn up empty-handed before members at this year's agm.

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. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.