# TRS  and CGT on the refund?



## George13 (29 Jul 2015)

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.


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## Brendan Burgess (30 Jul 2015)

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.



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?


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## Sarenco (30 Jul 2015)

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.


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## Brendan Burgess (30 Jul 2015)

Isn't compensation for personal injury,defamation, etc., exempt? 

Whatever exempts that form of compensation would exempt this.

Brendan


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## Sarenco (30 Jul 2015)

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.


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## Sophrosyne (30 Jul 2015)

It depends on whether the compensation is regarded as income or capital.

I am inclined to think it would be capital.


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## Sarenco (30 Jul 2015)

I'm inclined to agree but would that not mean that the compensation payment would be subject to CGT?


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## Terrve (30 Jul 2015)

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.


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## Sophrosyne (30 Jul 2015)

Sarenco said:


> I'm inclined to agree but would that not mean that the compensation payment would be subject to CGT?


 
CGT would only apply in the case of a disposal; not to something acquired.


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## Sarenco (30 Jul 2015)

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.


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## Sarenco (30 Jul 2015)

Sophrosyne said:


> CGT would only apply in the case of a disposal; not to something acquired.



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).


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## Sophrosyne (30 Jul 2015)

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.


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## Sarenco (30 Jul 2015)

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!).


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## Sophrosyne (30 Jul 2015)

I think the compensation might be treated something similar to this.


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## Sarenco (30 Jul 2015)

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.


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## Sophrosyne (31 Jul 2015)

Perhaps, it would be best for you to wait and see.


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## Sarenco (31 Jul 2015)

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...


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## rameire (31 Jul 2015)

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.


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## Lauren 5 (5 Aug 2015)

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,


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## dec_hy (5 Aug 2015)

yeah Lauren 5.  the bank also confirmed to me that they would pick up any payment due to Revenue.


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## Sophrosyne (5 Aug 2015)

dec_hy said:


> yeah Lauren 5.  the bank also confirmed to me that they would pick up any payment due to Revenue.


 
Are you sure that is what was said, i.e. that *PTSB* would pick up any payments due by borrowers to Revenue"?


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## Lauren 5 (5 Aug 2015)

Well she said that their dealing directly with revenue and we don't need to do anything, so I persume they worked out this and takeing it in to account when working out our figures, I asked is that takeing out my overpayment she said that's what I'll be getting back, what's in my letter


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## AAM_User (5 Aug 2015)

Lauren 5 said:


> Well she said that their dealing directly with revenue and we don't need to do anything, so I persume they worked out this and takeing it in to account when working out our figures, I asked is that takeing out my overpayment she said that's what I'll be getting back, what's in my letter



All that means is that they're "working with revenue"  they could be working with them to come up with a figure we're responsible for, or they're responsible for...


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## dec_hy (5 Aug 2015)

I specifically asked the question and was told that any refund due to the revenue would be met by PTSB


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## rameire (5 Aug 2015)

the trs implications could be from a few euro up to a couple of thousand per person.
 I wouldn't accept what they said on the phone about the trs being met by PTsb, if ththis is true I'd get that in writing.


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## Lauren 5 (5 Aug 2015)

dec_hy said:


> I specifically asked the question and was told that any refund due to the revenue would be met by PTSB


She said the same to me and she went and double checked with someone else


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## L John (5 Aug 2015)

Are people actually reading the documentation in full??

It states on page 10 '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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## AAM_User (5 Aug 2015)

Was on to them and asked & they confirmed that they will be making any payments to the RC.  Asked for it in writing.


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## Sophrosyne (5 Aug 2015)

AAM_User said:


> Was on to them and asked & they confirmed that they will be making any payments to the RC.  Asked for it in writing.


 
It would be good if it were true and you are wise to obtain written confirmation.

I still have a suspicion though that PTSB will just make a bulk payment to Revenue on behalf of those concerned but that individual settlements will be reduced by any amounts owed to Revenue.


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## Sarenco (5 Aug 2015)

Sophrosyne said:


> It would be good if it were true and you are wise to obtain written confirmation.
> 
> I still have a suspicion though that PTSB will just make a bulk payment to Revenue on behalf of those concerned but that individual settlements will be reduced by any amounts owed to Revenue.


 
I would share your suspicion. 

Just to further complicate things, would any Revenue settlement discharged by PTSB on behalf of those concerned not itself be treated as a taxable benefit (a gift?) to those individual borrowers if it is not deducted from the compensation payments made by PTSB (which payments may also be taxable IMO)?


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## Gordon Gekko (5 Aug 2015)

There is no taxable gift here and no CGT.

On first principles, there couldn't be.


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## Sarenco (5 Aug 2015)

Gordon Gekko said:


> There is no taxable gift here and no CGT.
> 
> On first principles, there couldn't be.



Fair enough - I'm really not sure how these payments would be treated for tax purposes.

If somebody discharges a liability (such as refunding excess relief payments) that would otherwise fall to me to discharge from my own resources, rather than simply giving me cash, how would you characterise that payment?  It's obviously a benefit that accrues to me that is not in the nature of a loan, remuneration or in consideration for the supply of any services or goods by me so if it's not a gift, well, what is it?

Similarly, if I receive an ex gratia payment that is not in settlement of a claim under any specified employment legislation or a personal injury claim or a redress payment that is otherwise tax exempt under any legislative provision, how would you characterise that payment for tax purposes?  

I'm not suggesting that I know the answers to these questions but I don't think it's clear-cut that these payments would not have any tax consequences.


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## Gordon Gekko (5 Aug 2015)

Well in the context of a gift, you'd look to the company's shareholder(s).

Who are the State.

There is no gift.


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## Sophrosyne (5 Aug 2015)

I could be wrong, but I cannot see PTSB picking up the tab for excess TRS granted to individual borrowers.

I think that PTSB, following Revenue instructions, will work out the excess TRS in each case and pay over the collective excess to Revenue.

It will then reduce each individual settlement by that individual's excess TRS before payment.

I think that is what PTSB means when it advises "you need not take any action in this regard".


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## Sarenco (5 Aug 2015)

Gordon Gekko said:


> Well in the context of a gift, you'd look to the company's shareholder(s).
> 
> Who are the State.
> 
> There is no gift.



Sorry, I don't follow you - could you expand on this somewhat?


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## Sarenco (5 Aug 2015)

Sophrosyne said:


> I could be wrong, but I cannot see PTSB picking up the tab for excess TRS granted to individual borrowers.
> 
> I think that PTSB, following Revenue instructions, will work out the excess TRS in each case and pay over the collective excess to Revenue.
> 
> ...



I am inclined to agree.

I struggle to believe that PTSB would refund (what turned out to be) excessive TRS payments on behalf of their borrowers without subsequently recouping this from those borrowers - why would they?


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## Gordon Gekko (5 Aug 2015)

Sarenco said:


> Sorry, I don't follow you - could you expand on this somewhat?



For Gift Tax to apply, there needs to be a human being, either directly or indirectly. It couldn't apply to a payment from a plc or a State entity.

It could in theory apply in a scenario where (say) I arrange for my company to pay something to you for no reason.


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## kaza (5 Aug 2015)

Sarenco said:


> I am inclined to agree.
> 
> I struggle to believe that PTSB would refund (what turned out to be) excessive TRS payments on behalf of their borrowers without subsequently recouping this from those borrowers - why would they?



I received my letter today. Like you I fully expected PTSB to deduct the TRS over-payment from my reimbursement amount. However, based on my calculations, they seem to be reimbursing me the TRS over payment also, which I was really surprised by. Obviously, my calculations might be wrong - and I need to wait for them to send me the detail of my over-payments to confirm this. I plan on ringing in the morning to try and get more information on this.


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## Sarenco (5 Aug 2015)

[duplicate post]


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## Sarenco (5 Aug 2015)

Gordon Gekko said:


> For Gift Tax to apply, there needs to be a human being, either directly or indirectly. It couldn't apply to a payment from a plc or a State entity.
> 
> It could in theory apply in a scenario where (say) I arrange for my company to pay something to you for no reason.



But isn't that exactly the scenario here?  PTSB (a plc) would be making a payment to Revenue (effectively, the State) on behalf of a borrower (a human being) for no apparent reason.

PTSB doesn't have any obligation to refund the excess TRS payments to Revenue - it didn't benefit from these payments in the first place.  It may well do so for administrative convenience, in agreement with Revenue, but if this isn't subsequently recouped from the relevant borrowers, then a benefit accrues to those borrowers for which no consideration has been paid.


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## Gordon Gekko (5 Aug 2015)

Yes, but not a gift. My sense is that the tax relief will have to be clawed back. Customers have obtained relief on interest that they didn't pay. But if Permo pay Revenue (i.e. take the hit), my view is that it will be a tax nothing and that Revenue will confirm this by way of an eBrief.


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## Sophrosyne (5 Aug 2015)

Sarenco said:


> I would share your suspicion.
> 
> Just to further complicate things, would any Revenue settlement discharged by PTSB on behalf of those concerned not itself be treated as a taxable benefit (a gift?) to those individual borrowers if it is not deducted from the compensation payments made by PTSB (which payments may also be taxable IMO)?


 
Let's not get ahead of ourselves.

It might serve to confuse posters entitled to settlements.

Let's first see whether or not settlements are reduced by excess TRS.


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## Sarenco (5 Aug 2015)

Gordon Gekko said:


> Yes, but not a gift. My sense is that the tax relief will have to be clawed back. Customers have obtained relief on interest that they didn't pay. But if Permo pay Revenue (i.e. take the hit), my view is that it will be a tax nothing and that Revenue will confirm this by way of an eBrief.



You may well be right but the legislative basis for this is not immediately obvious to me - powerful and all as they are, Revenue can't legislate by eBrief!

In any event, if PTSB was to gross up the compensation package to include the excess TRS payments - and no further tax was payable in this regard by the relevant borrowers - well, that would be a pretty sweet deal.  Not sure how I feel about that as a taxpayer/PTSB shareholder but this is going to be such a mess to resolve this is probably a minor detail in the grand scheme of things.


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## Sarenco (5 Aug 2015)

Sophrosyne said:


> Let's not get ahead of ourselves.
> 
> It might serve to confuse posters entitled to settlements.
> 
> Let's first see whether or not settlements are reduced by excess TRS.



Fair point.  I'm sure this will all be sorted in the fullness of time.


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## Gordon Gekko (5 Aug 2015)

Sarenco said:


> You may well be right but the legislative basis for this is not immediately obvious to me - powerful and all as they are, Revenue can't legislate by eBrief!
> 
> In any event, if PTSB was to gross up the compensation package to include the excess TRS payments - and no further tax was payable in this regard by the relevant borrowers - well, that would be a pretty sweet deal.  Not sure how I feel about that as a taxpayer/PTSB shareholder but this is going to be such a mess to resolve this is probably a minor detail in the grand scheme of things.



I prefer to look at it another way. Show my the legislative basis for it being taxable.

Not subject to CAT, CGT or income tax in my view.

Compensation is only subject to income tax if it's compensation for loss of income.


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## Sarenco (5 Aug 2015)

Not sure I'd necessarily agree with that formulation.  The exemption from taxation of most redress schemes or settlements is dealt with by way of specific legislation.

I thought this note on the taxation of compensation payments from the FSO in the UK was interesting - different legislative basis, obviously, but it clearly doesn't start with the assumption that compensation payments are not taxable.

http://www.financial-ombudsman.org.uk/publications/guidance/comp_tax.htm


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## Tok 3165 (5 Sep 2015)

We are part of the springboard redress scheme. This month we received no Trs on our mortgage payment. Our payment was €150 more than usual. I rang Springboard who couldn't answer any of my questions. Then rang revenue and was told we were overpaid Trs while being on the wrong interest rate and now have to pay back what we were overpaid. We will still be entitled to a lower amount of Trs but not until the overpaid amount has been paid back.


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## Brendan Burgess (18 Sep 2015)

I got this email from ptsb today 

"
We have agreed with Revenue that impacted customers have no obligations from a tax perspective as a result of the redress/ compensation payment. This includes customers with investment loans.


This means in practice that customers will not be deemed to be in an over claimed tax position for prior years as a result of the redress payment or being changed to a tracker margin."

Brendan


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## Junopops (18 Sep 2015)

Thanks for the update Brendan. Do you know if PTSB will be writing to their customers with this information?


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## Brendan Burgess (21 Sep 2015)

Hi Juno

I don't. It's very unsatisfactory that they don't issue a public statement on it.  

Brendan


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## Junopops (21 Sep 2015)

Brendan Burgess said:


> Hi Juno
> 
> I don't. It's very unsatisfactory that they don't issue a public statement on it.
> 
> Brendan



No problem. Thanks for the reply and thanks for all your information on the redress program so far. I've found this site to be a great help throughout it all.


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## kaza (6 Nov 2015)

Just with regards the TRS. I am wondering about the wording in their statement "customers will not be deemed to be in an over claimed tax position for *prior years* as a result of the redress payment"....

So can we take that to mean then are we for this year? 

The max TRS we are entitled to as a couple is €150 per month, which is the amount of TRS we had being receiving on the SVR. We should now be roughly entitled to only half of that amount on our new lower interest rate. Normally, our TRS would adjust automatically based on interest paid two months previous. So I have been on the new interest rate well over two months now and my TRS has not automatically adjusted - it is still at €150. Why is this I wonder? So what I mean is currently I am still receiving too much TRS, and have effectively for all months of this year. Surely revenue will come looking for this from me? So basically what I mean is that I will owe them roughly €75 * 12 = €900 for this year


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## Sarenco (6 Nov 2015)

The whole issue seems to be shrouded in mystery and, judging by Tok's post above, Revenue aren't necessarily adopting a consistent approach. 

At this stage you would have expected that the tax treatment would have been clarified.


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## kaza (20 Nov 2015)

I made a call yesterday to PTSB to try and clarify the "prior years" term. He told me that PTSB are settling any over payments of TRS for the whole period of time we were on the wrong rate. So basically I changed onto new rate in July - so I have been told that TRS prior to July will not be questioned by revenue. It will just be TRS from July onwards. My rate of TRS has not automatically updated yet, so I will be counted as over receiving TRS for the second half of the year basically.


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## Sophrosyne (21 Nov 2015)

Just as a matter of interest, did you clarify the prior years situation with Revenue?


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