"Share Split" - anyone understand this?

L

Lami

Guest
Hi.

I hold some shares in a company I used to work for and rang them recently as I want to sell a few shares. They informed me that there was a "Share Split" in January. Basically if we held, say, 20 shares, we got 40, but the value didn't change (I think). Anyway, since the share split the share value has gone way down (mostly to do with what's happening in the global markets at the moment). What I need to know is this: The current market value is less than what I paid for the shares so am I liable for CGT? Or do I somehow have to take account of the share split for tax purproses?

I'm totally clueless in this type of thing so I apologise if I'm not making myself clear. Any advice would be greatly appreciated.

Thank you

Lami
 
A share split does not impact on you financially you, so there's nothing to worry about or celebrate there, and there will be no change in your tax status.

So you had 20 shares at, for example, a share price of €10. You now have 40 shares (a 2-for-1 split) at a share price of €5.

RyanAir did a 2-for-1 split last year, McInerney did a 5-for-1 split.
Share splits are very frequent in the US, and seem to be becoming more common here.

A lot of what drives them is a psychological factor. A share trading at $80 per share sounds expensive compared with one trading at $20. The company does a 4-dor-1 split... now their shares sound cheaper, $20, and are more desirable to investors.

As regards selling the shares at a loss, you only pay Capital Gains Tax on a gain, not a loss, therefore you will not be liable. However, if sometime in the future you make a gain on shares, you can use this loss to offset your CGT liability. For more information on this, check out www.revenue.ie
 
Also - share splits do not give rise to any tax (e.g. CGT) issues. CGT is only an issue when you come to sell a share.

Reverse splits are also possible - e.g. 1 share for every two held with the new shares worth twice what the old shares were worth.
 
Thank you both very much. It's much clearer now. I do need to sell so as I'll be making a loss I'm not liable for CGT. Thanks again. I really appreciate the help.

Lami
 
If you incur a loss then you should still file a CGT return as normal so that you can offset this loss against any future capital gains at any point in the future.
 
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