TRS and CGT on the refund?

G

George13

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My only comments re the tax issue would be that irrespective of our mortgage interest we would still have to pay tax so while it makes our pain even worse that is not something we can do anything about. It's not as though we would have paid less tax if we paid less interest or didn't use money for a deposit. My heart sincerely goes out to those who suffered ill health, marital issues etc (on a lighter note it certainly made me realise how wise my now spouse is with their very cheap tracker, whether or not it influenced me to marry them is another matter!). We must also remember that it is possible that among the repossession cases could be strategic defaulters who e.g. pocketed rent and who could still get the same €25k on RIPs, that makes the whole redress scheme even worse for the genuine people. Blanket compensation levels never works.
 
From page 10 of the letter

We have been in discussion with the Revenue Commissioners and any tax issues arising are being addressed directly by us. Accordingly, you do not need to take any action in this regard.
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I have no idea what that means?

Will the compensation be reduced by overpaid TRS?

or will ptsb make a one off payment to the Revenue so that there is no need to go back over everyone's TRS?
 
I would assume that (what turned out to be) excessive MIR payments would be recouped by Revenue.

I wonder would any compensation payments (over and above the refunded interest payments) be taxable? I can't think of any obvious reason why it would be exempt.
 
Isn't compensation for personal injury,defamation, etc., exempt?

Whatever exempts that form of compensation would exempt this.

Brendan
 
You may well be right but my understanding is certain forms of compensation are specifically exempt from tax by way of a series of statutory exemptions - I don't think there is any general principle in this regard.

I do know that awards made by the Residential Redress Board (as an example of an extra-judicial redress scheme) had to be specifically exempted from tax in the legislation establishing the Board.
 
It depends on whether the compensation is regarded as income or capital.

I am inclined to think it would be capital.
 
I'm inclined to agree but would that not mean that the compensation payment would be subject to CGT?
 
I asked PTSB earlier about this and they said previous payments of TRS are not impacted and we are not liable for them. I was querying it because the new payment amount showing in my offer letter didn't match that on my online banking when the TRS was accounted for. She explained that as the new rate is lower, our entitlement to TRS has also decreased and it is a matter for revenue, not the bank. To be honest, the first person I spoke seemed a little clueless, it seems like they have drafted in people from other areas to man the phones. When I rang a second time to ask about this TRS, the person I spoke to seemed much more clued in. I was careful to record dates and names and keep a record of what was discussed. I'm going to try to keep everything in writing with them, by post.
 
Unscrambling this particular egg is not going to be easy.

Going forward, lower interest payments would obviously imply lower TRS, where available. But what about previous mortgage interest relief (MIR) payments which now turn out to have been excessive?

As a taxpayer, I would expect that the excessive MIR will be recouped by Revenue. Will this be taken out of compensation payments or will future TRS, to the extent available, now be reduced?

And how will compensation over and above the refunded interest payments be treated by Revenue?

I would assume (hope) that PTSB are trying to sort out these details with Revenue.
 
Sophrosyne said:
CGT would only apply in the case of a disposal; not to something acquired.
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Are you absolutely sure about that?

I'm not saying you're wrong (I genuinely don't know how this would be treated for tax purposes) but I'm pretty sure that certain compensation payments have been taxed as capital gains in the UK (as though the reward resulted from a disposal).
 
Well, I cannot be absolutely sure, but I can't see how a potential disposal could arise in the circumstances of the PTSB compensations.

What would the "gain" relate to? How would a PTSB customer make a disposal?

At all events, I am sure that as so many people are affected, Revenue will post something about this on their website.
 
Aren't insurance payments in respect of a capital asset subject to CGT even though there is no actual disposal?

I honestly don't know how any PTSB compensation payment would be treated for tax purposes but if it isn't income in the hands of the borrower, well, what is it? A gift?

Revenue can obviously only interpret legislation - they don't actually make the rules (although it doesn't feel like that sometimes!).
 
Thanks.

That's certainly an interesting precedent but, on the face of it, the analysis appears to turn on the fact that gains that would accrue on the disposal of the policies would be exempt from CGT and therefore compensation payments in respect of those policies can be treated as exempt from CGT.

Could you extend that logic to these circumstances? Maybe, but it's not particularly obvious to me.
 
No doubt. I'm sure it will all get sorted in time but it strikes me that there are a lot of details that still need to be ironed out. Ultimately all paid for by...
 
If somebody has overclaimed TRS, unless the bank has agreed to cover the cost of the money due to the revenue, the customer will have to pay the revenue back, this may be done before any refund is passed to the customer.

I hope pTsb has thought about this, otherwise customers will have revenue chasing after them in a couple of years.
 
Just got off the phone to a very helpfull girl after I received my letter this morning, I was asking bout the TRS, she said PTSB are in discussions with the revenue and we don't need to do anything,
 
yeah Lauren 5. the bank also confirmed to me that they would pick up any payment due to Revenue.
 
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