Maybe I’m misreading you here, but to be clear you will not be doing Deemed Disposals every few weeks. You will be doing a single tax return once per year where you will add up all the Deemed Disposals for the previous period. Ideally you’ll use a spreadsheet to do this so it will be a couple of clicks of a button to figure out the total, then fill it in to a box on your Tax Return. No rooting through piles of dividend slips figuring out income tax, no checking for dividends from other jurisdictions where some tax has already been withheld, no trying to sell a few quid here and there to harvest the CGT allowance and then do a CGT return etc etc.as I'll be deemed disposing holdings in 4 different ETFs every few weeks indefinitely from that period onwards if I continue as is
There was another thread where this was discussed, cannot find it on my phone though sorry. What I understood though was that there was little difference between shares and ETFs in this regard because any Exit Tax paid can be used as a credit against CAT/inheritance tax? The fact that you mention your wife there, perhaps that’s a nuance we didn’t consider - there wouldn’t be any CAT to offset against?41% funds are to be avoided. The clincher is that you get taxed on death.
I stick €100,000 into a fund, it grows to €200,000, I get hit by a train, and my Mrs is hit with a €41,000 tax bill.
I stick €100,000 into a portfolio of shares, it grows to €200,000, I get hit by a train, and my Mrs has no tax to pay.
Game, set, and match.
There was another thread where this was discussed, cannot find it on my phone though sorry. What I understood though was that there was little difference between shares and ETFs in this regard because any Exit Tax paid can be used as a credit against CAT/inheritance tax? The fact that you mention your wife there, perhaps that’s a nuance we didn’t consider - there wouldn’t be any CAT to offset against?
41% funds are to be avoided. The clincher is that you get taxed on death.
Do any of the financial advisors here have a comment/clarification on this point? It seems like a big reason to avoid all funds not just ETFs.What I understood though was that there was little difference between shares and ETFs in this regard because any Exit Tax paid can be used as a credit against CAT/inheritance tax?
Thanks for the guidance - that's helpful.My views/experience. I am not a tax consultant, so do your own verification
1) In theory, I think you should. In practice, probably not required. I've a monthly plan set up with Trade Republic. I reported the first purchase date in the year and the full amount of all purchases in the year. I doubt Revenue really care (that was advice I got for the exact same question somewhere else on AAM).
2) I think you're still meant to inform them about the purchase. No need to inform them about the sale IMHO.
3) Just deemed disposal tax (assuming you don't sell within 8 years of purchase)
4) You should register with ROS for "income tax". You can fill in your ETF purchases and gains on Form 11 after the end of the tax year (and before mid November of the following tax year)
5) In Form 11, from what I remember, you just state the annual gains as a single figure. However, you will need to calculate the gains for each individual purchase to arrive at the overall figure. So, to calculate gains for each month, you'd need to know the market value of the fund on the anniversary of purchase for each month. Use a spreadsheet.
Rather than selling and re-buying the lot at the end of year 7, another option might be to sell, say, the first two months of purchases before year 8. So you pay tax at 41% on the actual disposal. Then use whatever is left over to pay the deemed disposal on the profits from purchases from month 3 to 12. You'd need to do the maths to work out how many months is optimum to sell if taking this approach.