Key Post: CGT on sale of quoted shares

[Brendan Burgess]

Hi,

My aunt has owned AIB shares since the 60s and is trying to figure out her CGT liability if she were to sell them. Is there a statute of limitations on the liability?

Also, they have split a few times over the years; how do you calculate the CGT and would you include shares you received in lieu of the dividend.

Thanks

 

[Grundy]

CGT

<!--EZCODE ITALIC START--> strader<!--EZCODE ITALIC END--> your aunt's got problems! (Mind you, they're problems I wouldn't mind having!)

This could be very, very complicated.

Definitely no statute of limitations.

CGT starts from a base in 1975.

From 1978 indexation relief kicked in.

Yes, scrip dividends have to be brought into account at zero acquisition cost.

Did your anut not bed & breakfast gains over the years so as to avail of the annual personal exemption?

One possibility, is that if you have the basic records, i.e. when the shares were bought and when you got the scrips, just give the info to Revenue and ask them to calculate the tax - though this only works when you actually realise the gain and it becomes taxable.:smokin

 

[strettie]

Re: CGT

Strader,

I would not agree with the above to give the info to the revenue to calculate , I have found a large deterioration in the knowledge within the revenue office over the last 12 months . 30% of the assessments I have received for clients have had errors with some errors defying belief.

Get good tax advice it will pay for itself in the long run, the revenue will very rarely advise you on how to reduce your tax bill !!!!!!!!!!!!

Strettie

 

[Grundy]

CGT Calculations

My argument about givng the calcs to the Revenue is that "heads you win, tails you don't lose!"

Yes, the Revenue are stretched. If they come back with an answer that looks like you're being screwed pay for professional advice to reduce it.

If they come back with an answer that looks like they have made a mistake and undercooked it, settle quick!

The complexity of your aunt's case depends a lot on whether there was any buying or selling in the last 40 years and the extent to which she has kept records. If there has been buying and selling, then very complicated "First In First Out" rules apply. You will probably finish up agreeing a bill based on reasonable assumptions, especially if the record keeping has been deficient.

In the end, whether it is worth paying for professional advice or not will depend on the sums involved. If your aunt has 1,000 shares, that probably doesn't justify professional advice. If she has 100,000 definitely get an accountant, versed in these matters.:smokin

 

[Tommy]

Re: CGT Calculations

<!--EZCODE BOLD START--> If they come back with an answer that looks like they have made a mistake and undercooked it, settle quick!<!--EZCODE BOLD END-->

This would be a bad strategy. CGT is a self-assessment tax. The onus is on the taxpayer, not the Revenue, to determine the size of the liability before it is paid. If the Revenue underestimate a liability the taxpayer is still legally obliged to pay the full amount due. Interest (and possible penalties and publication) would apply if an underpayment were unearthed some time in the future

You can find work out the potential tax liability by calculating the approx. amount of the tax due as follows (based on a holding of shares bought before 6/4/74, with no purchases of shares in the meantime)

<!--EZCODE BOLD START--> Taxable Gain<!--EZCODE BOLD END-->
disposal value of shareholding
Less
(value of shareholding at 6/4/74
x indexation multiplier (2002 disposals) of 7.180)
= Chargeable Gain
Less Annual Exemption of £1000 (shares held singly)
= Taxable Gain

<!--EZCODE BOLD START--> Tax Due<!--EZCODE BOLD END-->
Tax Due = Taxable Gain x 20%

strader, your aunt should of course get professional advice unless the amounts involved are minuscule. The Revenue will do their best to calculate her liability using the above formula if they are asked, but you cannot expect them to take responsibility for potentially complicated calculations or to offer any sort of advice on how your aunt should plan her affairs to minimise the tax payable on a disposal.

(She need not pay an arm and a leg for such advice. Negotiate rates beforehand with whatever accountant or advisor you choose and feel free to shop around)

ps She should get this advice before selling her shares. It may be much harder to plan effectively to minimise the tax bill after the transaction. (On that point, I very much doubt that the Revenue would give her case much thought before the transaction takes place)

Tommy
www.mcgibney.com

 

[strader]

CGT

Thanks a lot for the advice folks.

 

[mickeym]

CGT

Can anyone/Tommy, direct me to the Revenue CGT indexation table!

Thanks,

m

 

[ClubMan]

Re: CGT

Useful references:


- [broken link removed]

- [broken link removed]