Laser cards

I'm writing to let you know about something that caught me out recently concerning my laser card. In my last month's statement, I found a laser debit which was 11 months old.

On querying this, the bank informed me that there is no time limit on laser debits so that, even though the marketing of the card implies that debits are made within one or two days, you have no guarantee of that. The time taken for the debit is dependent on the vendor.

I pointed out that even a cheque expires after six months. The bank said that as this rarely happened they felt there was no need to put an expiry date on laser debits.

I would normally keep very good track of my account but I do this mentally and so I hadn't reckoned on an 11-month-old debit.

I am glad, however, that it didn't affect my Special Savings Incentive Account (SSIA), which it could have done!

Ms U.O'N., Dublin

I can imagine you being somewhat surprised to find a Laser debit appearing 11 months late. As you say, the whole idea of the debit card system is that the money is deducted from your account more or less there and then.

You can bet that the Government won't be 11 months late in collecting the new stamp duty that it is levying on your Laser card.

Technically speaking, you would have grounds in this case to seek what is called a chargeback.

Essentially, that is a situation where a customer disputes an item either because they have already paid for it, because they never bought it, or because the transaction is being contested in some other way.

With chargeback, you contact your bank - the one that issued your Laser card - and get it to notify the bank of the retailer making the debit to say it is being contested.

Assuming the chargeback is accepted as valid, they will debit the transaction back to the retailer.

There are, I am told, 19 grounds on which you can seek a chargeback on a Laser transaction and one of them is the time the debt has been outstanding. This is called late presentment.

When you pay by Laser, the card is put through a machine which, apart from checking your bank account to ensure you have the funds for the transaction, generates an authorisation code.

This code is valid for 30 days - a long way short of 11 months. In general, the retailer will batch their Laser transactions and process them to their bank at the end of each day.

If this hasn't happened in some time, such as in your case, the bank will generally notify the retailer that there is a gap in his returns and it will be sorted.

For all these reasons, 11 months is an extraordinary gap. After all, the whole thing is electronic.

It is not like the old days of credit cards, when transactions were processed by manual "zip-zap" machines or cheques, which are paper-based and therefore require more time to clear the system.

However, having said all that, if you recognise that this is a valid transaction, however late, it really should be paid. After all, if you seek a chargeback and are successful, the retailer will not be paid.

By the way, while we're on the subject of card debits, it is worth noting that credit card purchases can apparently be debited to your account up to six years after the transaction date.

Quite how a customer is supposed to remember details of a purchase up to six years previously is a mystery to me; I have trouble recollecting some of the transactions that appear on my bill and they occurred in the past month! I imagine that chargeback arrangement would also apply here in certain circumstances.

Smurfit

I am trying to make my tax return for 2002 and I do not know how to calculate my capital gains liability in respect of the money I received for my 9,872 Smurfit shares (€21,224.80).

You had an answer to a query in Q&A in which you mentioned a helpline. I have tried this number but it always is engaged? Have you any further information?

Mr A.K., Dublin

The helpline has been discontinued at this stage, although you can still get information by calling Smurfit's Dublin headquarters.

Working out the capital gain on the Smurfit deal is not the easiest but it is possible.

The first thing is to calculate the cash amount received for your shares, which you have done.

You then have to add to that the amount attributable to the Smurfit Stone shares that you also received as part of the deal. The reason for this is that you will need to work out the total value of your shareholding at the time of the leveraged buyout to work out your gain.

Apart from the €2.15 per share cash offer, shareholders also got one Smurfit Stone Container Corporation share for every 16 Jefferson Smurfit shares held. In your case, that amounted to 617 Smurfit Stone shares.

Next you need to have the price on the day the Smurfit Stone shares were "spun out" of the company.

As far as I can determine, following High Court approval of the successful extraordinary general meeting motion to strip out the Smurfit Stone part of the business, the judge set September 3rd last year as the date of completion.

Assuming that is so, the closing price on that day in New York for Smurfit Stone was $13.80. Your 617 Smurfit Stone shares would have been worth $8,514.60. At the prevailing exchange rate on that day of $1.14 to the euro, that would equate to almost €7,469.

Adding that to your cash sum, your total payment for the original 9,872 shareholding in Smurfit was €28,693.75.

To work out your capital gains, you will also need to check when you bought the shares and allow for indexation - details of which are available from the Revenue website - and any cost involved in their purchase (such as stockbroker fees). What's left is the capital gain. You are entitled to a gain of €1,270 tax-free for last year. The balance will be taxed at 20 per cent.

Indexation

You recently dealt with a question on capital gains tax (CGT). One point I have not seen clarified anywhere relates to the indexation change in the Budget. Will indexation applicable up to the date of change remain in place, or will the abolition of indexation apply retrospectively?

Mr P.G., email

Indexation for the purposes of capital gains will continue to apply up until the end of last year when the Minister for Finance, Mr McCreevy, dictated in his budget that it would no longer operate.

There is no retrospection on this measure. People who acquired assets before 2002 will still be able to use Revenue-determined indexation values to take account of inflation up to the end of 2002.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or by email 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.