life assurance exit tax and etfs to be reviewed

The fact that this was actually mentioned in the budget speech must mean that the government are actually going to to something about this. But they have still linked it with life assurance so obviously they don't want to move on reforming the tax for ETFs alone. The government must have been getting some heat on this issue all the same
 
I think their job would be a lot easier if they knew exactly how much they were collecting via ETF self-assesed deemed disposal/exit tax. For this reason I'd have my doubts on the Summer 2024 Report/Review end date.

They have a smooth system for Life Assurance Exit Tax (it has it's own tax head in their receipts figure) but The declaration of dividends/gains from ETFs, and the associated tax take, cannot be separately identified from these returns, since the relevant fields include dividends/gains from sources other than ETFs.

My understanding is that if the tax rate was to reduce on life assurance exit tax then in force policies would be due refunds, calculated and added back to their plans by the product providers.

How do you do that for ETFs when they don't seem to have a grasp on the extent of what ETFs are bringing in? Would it not be an administrative nightmare?


Gerard

www.bond.ie
 
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Brendan Burgess said:
I would expect that it will be changed.

I doubt that they would do a review if it were not intended to change it.

Brendan
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Revenue did a review of the taxation of US domiciled ETFs and simply removed the assumption that these ETFs were liable to CGT. Caused a massive amount of confusion.
GSheehy said:
How do you do that for ETFs when they don't seem to have a grasp on the extent of what ETFs are bringing in? Would it not be an administrative nightmare?


Gerard

www.bond.ie
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From what I gather, the Revenue are still trying to get to grasp on the taxation of funds and ETFs bought on platforms and outside of life companies.
 
I presume that there will be a public consultation on it and we can all give them the benefit of our wisdom on the topic.

Brendan
 
Brendan Burgess said:
I presume that there will be a public consultation on it and we can all give them the benefit of our wisdom on the topic.

Brendan
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Closed

They had 337 submissions and I'd say the vast majority of those were from individuals who buy ETFs

Paschal announced the review in the last budget.
 
I hope so. Seeing as he announced this review months ago, I was hoping it would have been completed and an announcement made in the Budget. We are now only at the start of the process. If there is a public consultation, I will be submitting my opinion. The solution isn't that complex...accumulating funds - deemed disposal and 41% tax applies, distributing funds- no deemed disposal, dividends taxed as income, CGT on gains.

Revenue are getting their income, investors are getting their choice.

Steven
www.bluewaterfp.ie
 
GSheehy said:
I think their job would be a lot easier if they knew exactly how much they were collecting via ETF self-assesed deemed disposal/exit tax. For this reason I'd have my doubts on the Summer 2024 Report/Review end date.

They have a smooth system for Life Assurance Exit Tax (it has it's own tax head in their receipts figure) but The declaration of dividends/gains from ETFs, and the associated tax take, cannot be separately identified from these returns, since the relevant fields include dividends/gains from sources other than ETFs.

My understanding is that if the tax rate was to reduce on life assurance exit tax then in force policies would be due refunds, calculated and added back to their plans by the product providers.

How do you do that for ETFs when they don't seem to have a grasp on the extent of what ETFs are bringing in? Would it not be an administrative nightmare?


Gerard

www.bond.ie
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The refunds on life assurance policies happen at the next chargeable event (8 year anniversary, withdrawal or death). ETFs would be the same, but with the punter having to calculate the amount of the refund (as is currently the case where they fall in value following an 8 year payment).
 
Fortune said:
The refunds on life assurance policies happen at the next chargeable event (8 year anniversary, withdrawal or death).
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That's not how it works at the moment where exit tax was paid on a partial encashment and the vlaue of the plan fell subsquently. The tax refund is added back to the plan immediately. I don't see why a drop in the tax rate would not also be able to be added back immediately to an in force plan and that the life assurance companies system can cope with this.

Gerard

www.bond.ie
 
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Thanks G

That is the problem with announcing something important in the middle of a very long thread. It gets lost.

Brendan
 
GSheehy said:
Closed

They had 337 submissions and I'd say the vast majority of those were from individuals who buy ETFs

Paschal announced the review in the last budget.
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I'd say they got alot more submissions to this than they ever got before for any other financial submission relating to investments or funds. Therefore they can't ignore all these small time investors and only listen to the big financial firms like they usually do
 
joe sod said:
Therefore they can't ignore all these small time investors and only listen to the big financial firms like they usually do
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Individuals have a better chance on this one.

I'd be surprised if Life Assurance Companies made individual submissions. I'd be more surpised if ETF platforms did.


Gerard

www.bond.ie
 
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GSheehy said:
That's not how it works at the moment where exit tax was paid on a partial encashment and the vlaue of the plan fell subsquently. The tax refund is added back to the plan immediately. I don't see why a drop in the tax rate would not also be able to be added back immediately to an in force plan and that the life assurance companies system can cope with this.

Gerard

www.bond.ie
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The life assurance companies just show the refund amount on their systems and statements, the refund hasn't actually taken place until a transaction occurs. It's the same for ETFs, but the individual needs to go to Revenue for the refund.
 
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