Changing Fund Provider and Tax Implications

[taytoman]

Hi

I have 18K invested in an index tracking fund with a provider, which has lost 6K and is now work 12K. As I understand it, if the fund value recovers, I will not pay any tax on gains made until when or if it gets "into the black" and is again work more than my initial investment of 18K.

Q- If I switch the 12K to another provider, do I straight away pay tax on any future gains on the 12k, or can I somehow "carry over" my loss to a new provider (with some kind of statement of loss made or whatever), and retain the "tax free" status of my fund until when or if it climbs back above 18K in the future?

Sorry for long winded question, but this is the best I can explain it

 

[GSheehy]

Q- If I switch the 12K to another provider, do I straight away pay tax on any future gains on the 12k,

Yes. There is no 'Capital Gain/Loss' type system for unit linked funds.

If you took a partial encashment or surrender of the 'new' policy, and it was in positive territory, you would be hit with the exit tax.

You do have the option of switching between funds from the same provider.

 

[PMU]

Hi

I have 18K invested in an index tracking fund with a provider, which has lost 6K and is now work 12K. As I understand it, if the fund value recovers, I will not pay any tax on gains made until when or if it gets "into the black" and is again work more than my initial investment of 18K.

Yes. You will pay tax on the difference between the amount you invested and the encashment value of the policy if it is greater. If the encashment value is less that the amount invested there is no tax to pay.

Q- If I switch the 12K to another provider, do I straight away pay tax on any future gains on the 12k, or can I somehow "carry over" my loss to a new provider (with some kind of statement of loss made or whatever), and retain the "tax free" status of my fund until when or if it climbs back above 18K in the future?

No. Under the tax regime for collective products you can’t offset or "carry over" the loss on one policy against the gain on another. If you switch to another policy you will pay tax on the difference between 12k and the encashment value of the policy when you cash it in (assuming you have made a gain).

You do have the option of switching between funds from the same provider.

Yes but if the switch involves switching to another policy it’s the same as moving to another provider, so all fund switches should take place within the same policy.

 

[taytoman]

Thank you very much