Please send your queries to Dominic Coyle, Q&A, The Irish Times, 11-15 D'Olier 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.
Stock listing
I have a few shares in Miller Fisher and wonder if I missed something lately or have they disappeared? They're not mentioned at all on Aertel anymore and what does "-" in The Irish Times
Mr J.W., e-mail
No they have not disappeared. It is just that they rarely trade on the Irish market anymore. The main reason for this is that the company changed its registered domicile to the UK and joined the FTSE SmallCap. It did this because its headquarters were already in the UK as was the bulk of its business and shareholders.
It is still quoted on the Irish exchange, which is why it appears on The Irish Times list, although there is no accompanying data as the most recent Irish trade is so far distant to be irrelevant. I cannot answer for why RTE's Aertel service has decided to drop its quote. If you do want to follow the stock's progress, you will find it listed in the list of London closing prices in The Irish Times.
Capital gains
I read your answers recently on the issue of capital gains and share gains/losses and I was just wondering about the following. I buy, say, £10,000 worth of shares in company A and they double in price and I sell them; at the same time, I buy £10,000 in company B and they collapse to half their original value and I sell. What are my liabilities?
Mr J.R., e-mail
Okay, the first tranche of shares double in value and are now worth £20,000 and the second set are worth half what they were at the time you bought them and are now worth £5,000.
Assuming all the transactions - both the purchases and both the sales - take place in the same tax year, you have a capital gain of £5,000. The first shares doubled from £10,000 to £20,000, a gain of £10,000 and the second set halved from £10,000 to £5,000, a loss of £5,000, leaving you a net gain of £5,000 on the transactions.
At the moment, your capital gains tax-free allowance in a year would be £1,000, leaving you a capital gain liable to taxation of £4,000. At the current capital gains tax rate of 20 per cent, your liability would be £800.
If you hold the shares for longer than one year, indexation factors come into play. These serve to effectively reduce the capital gain by allowing for inflation and so would lower your tax bill.
If the loss of the second set of shares had matched the gains on the first set, you would have no liability as they would simply cancel each other out. If the loss on share B had been greater than the gain on share A, you would have offset as much as possible against your gains in that year and offset the rest against any gains in subsequent years.
Savings abroad
I worked abroad for more than two years and got paid into an account of an Irish bank in Jersey. While working abroad I was in the non-resident tax bracket. Since then, I have returned home to Ireland and am now considered a resident again with regard to taxation. I have closed my account in Jersey but have retained an investment portfolio with the fund management subsidiary of the bank (in US dollars). I'm now wondering about my potential tax liability if: a) I leave the investment overseas or; b) I cash in the portfolio and bring the money back here?
Mr J.F., e-mail
The answer, as I think you suspect, is all to do with residency. While you were resident abroad, you were not liable to tax on your income or savings under the Irish system. Now, however, you are back under the Revenue Commissioners and they take a slice of everything. As a resident you are liable to pay tax here on your worldwide income, regardless of where it was earned or where it is held.
As such, it doesn't matter, taxwise, whether you leave your portfolio intact or repatriate it. The only question you then need to ask yourself is where your savings are likely to perform more strongly.
Returning home
It is my intention to return to Ireland for good within the next 12 months and at the moment I am making some enquiries about financial implications. Can you help me with the following? I should say I have already bought a house in Ennis. 1. What are the tax implications, if any, on the capital gain I will make when I sell my house in the UK? 2. I currently have a portfolio of shares in UK companies. How will I be treated for capital gains tax when I come to sell them? Can I keep a British bank account and sell the shares as if I were still resident in the UK or do I have to sell them through an Irish broker? Mr G.B., e-mail
Partly, the question turns on when you will sell your house in Britain and what the status is of the Ennis home. If you sell the British house before you return to the Republic, I assume it will be treated under British law, where capital gains allowances are fairly generous. In any case, I assume it is your principal private residence and, as such is not liable for capital gains tax here or in Britain.
However, if you were to move back to the Ennis house and it were to become your principal private residence and you were subsequently to sell the British house, it might be treated as a second home and therefore liable to capital gains in full. In such circumstances, it would be worth arguing with the Revenue that you should only be liable for any capital gain on the time between your ceasing to use it as your principal private residence and your selling it. This would be a minimal amount if the house was sold quickly after your return and should leave you with a very small liability, after your tax-free allowance on capital gains. The advice of an accountant well versed in the intricacies of cross-border movement would be worth getting.
You should remember that, if you keep the house in Britain for any length of time after your return to the Republic and rent it out during that period, you will be liable to income tax here on any net income after defined allowances.
Turning to your portfolio of shares, any share sale subsequent to your return to Irish tax residency will be liable for capital gains here. This is levied at a rate of 20 per cent on any gain in excess of £1,000 in any given tax year.
You can retain a British bank account, but it makes no difference to any share sale. Such a sale will be treated under Irish tax rules once you are a resident here, regardless of who sells the shares on your behalf. Having said that, there is certainly no obligation to use an Irish broker.
