# Question on tax and Rabo investments



## dub_nerd (30 Sep 2009)

First of all, sincere apologies if this is all addressed elsewhere -- I have read key posts etc. but I am still confused. Main problem is I am unsure of some definitions and can't find anything related on revenue.ie site.

I am invested in a Rabo investment fund. At some point I will be cashing out. I am currently assessed for PAYE tax.

Here's some things I'm not sure about and would appreciate confirmation/correction.

1) Most of the Rabo funds are something called a UCITS (Undertaking for Collective Investment in Transferable Securities ... or somesuch?).

2) I can find no reference to anything called a UCITS on the Revenue site. I'm led to believe (from Rabo site) that the tax rate is 28% as of April 2009, but where do I get Revenue confirmation of this? Is this the same or different from the normal CGT rate? If it's a special rate, what other sorts of things does it apply to. Why can't I find any reference at all to "special rates" on the Revenue site for anything, let alone a "UCITS"?

3) As soon as I cash in this investment I am liable for self-assessment tax. I am assuming I have to do nothing whatsoever until that point, or notify Revenue of anything.

4) I am REALLY confused about applicable dates. The Revenue site talks about gains made up to 30-Sep and 31-Dec being due for preliminary tax in December and January respectively. The key posts here say different. What's the up-to-date situation, and how do I get it "from the horse's mouth"?

5) Before I do anything do I have to notify Revenue that I want to be assessed on a self-assessment basis? Do I have to tell them again when I want to go back to straight PAYE (since this is probably a once-off for me)?

6) I'm in the fortunate position of having made some profit (at the moment), but some or all of it is going to charity. If I'm self-assessed I believe I reclaim tax on donations myself, rather than the PAYE approach of filling out a CHY2 form for the charity and having them claim it. Is this correct? Can I put that claim in along with preliminary tax return, so that it all nets out in one go? (rather than paying first and reclaiming later). What documentation is required as evidence from the charity?

7) Last year I got caught (in a minor way) by DIRT increases when I got some deposit interest credited on 02-Jan. I don't want to find that the tax rate on this investment suddenly doubles in next December's budget. If that's going to happen, I'd prefer to cash out before the increase (assuming it only applies from Jan 2010). Can I afford to wait for the budget before cashing in? (not sure if I wouldn't anyway).

Many thanks in advance for any info.


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## dub_nerd (30 Sep 2009)

Correction on number 4) ... I think the revenue site says tax due in *October* and January respectively.


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## dub_nerd (30 Sep 2009)

Also, I just want to reiterate that I REALLY have searched for other threads on this topic, for instance:

http://www.askaboutmoney.com/showthread.php?t=100456

http://www.askaboutmoney.com/showthread.php?t=46083

Confusion seems to reign supreme there too.

A big thing that is worrying me is that even Revenue offices don't know the ins and outs when phoned, according to one thread. Because of my charitable donation it makes a really big difference to me if I return a Form 12 (PAYE) versus self-assessment. In the former case I need to pay the charity an "after-tax amount" and let them claim it. In the latter I pay them a "before tax amount" and reclaim it myself. There's a sizable amount of money involved and if I (or Revenue) get it wrong I may end donating a lot of money I don't have and can't reclaim!

:-(


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## SunnyH (6 Oct 2009)

I'm very confused too.  I thought that I everyone is entitled to make a capital gains of €1270 per year since the supplementary budget in April 2009.  But when you work through the Rabodirect example there is no mention of the capital gain exemption.  
Other thing is I lost more money than I gained in 2008 but when I print out rabodirects "detailed summary of profit" statement, it lists the profit on the funds where I actually made a loss as "none" surely over all I'm down money and I shouldn't have pay the 28% tax.  Am I better off trading my own stocks I know there is a "open source fund" from http://www.marketocracy.com surely the revenu can't define this as a managed fund.


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## minion (6 Oct 2009)

SunnyH said:


> I'm very confused too.  I thought that I everyone is entitled to make a capital gains of €1270 per year since the supplementary budget in April 2009.  But when you work through the Rabodirect example there is no mention of the capital gain exemption.
> Other thing is I lost more money than I gained in 2008 but when I print out rabodirects "detailed summary of profit" statement, it lists the profit on the funds where I actually made a loss as "none" surely over all I'm down money and I shouldn't have pay the 28% tax.  Am I better off trading my own stocks I know there is a "open source fund" from http://www.marketocracy.com surely the revenu can't define this as a managed fund.



Funds are different.
There is no tax exemption.  Also the tax must be paid on a first in first out basis.  You could theoretically sell most of your funds and end up paying tax but making a loss overall


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## ixtlan (7 Oct 2009)

I was going to open a separate thread but it's related so here goes...

Firstly Minion is correct of course. The gains on Rabodirect funds are not CGT but a special case. You cannot offset a loss in one fund against a profit on another. It seems unfair but that's the way it is. 

I believe the gains must be paid by October 31 of the following year. However you should also note that as a self-accessed person you may need to pay preliminary tax. Often for a PAYE person under self-accessment you will not have any preliminary liability if your income over PAYE is minimal. That depends on your circumstance. Note that preliminary tax is an aspect of being self-accessed and having extra income. Nothing specifically to do with funds.

For the charity, you will pay them 250 or over, then list it on your tax return. Revenue seek no proof from the charity, though you might obviously want to keep some record. I don't think you can lose on this. Pay the charity and claim the tax back via your tax return. 

Personally even though I am 95% PAYE I have gotten used to being self-accessed because one year I had stock options that exceeded the threshold. Now some years I exceed it and some I don't but I find it easiest to just do the return anyhow because you can make sure you have claimed all your allowances and reliefs. If you wish you can tell Revenue to switch back to PAYE. 

On the matter of ETF gains...

If you have an investment in ETFs with New Ireland, or Eagle Star or whoever my understanding is that these can be umbrella products where you can move between funds without immediately incurring a tax charge. I don't really understand this though because if some funds are removed how is the gain calculated? 

Also, if you invest in ETF funds that are traded on for example the NYSE (via an online broker), it seems that you could offsets losses in one against gains in another? Would I be correct in assuming that Revenue consider you own a stock and not an ETF. That is... it is a stock... the fact that underneath it's an ETF is irrelevant? There are several of these types of ETF based stocks available on the NYSE.

Ix


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## SunnyH (10 Oct 2009)

Thanks Ix that explains that.  So I guess you should only ever invest in a Rabodirect fund, if your positive its going to increase in value.  There are lots of hidden charges.  Rabodirect are not as transparent as they would lead consumers to believe.  My advice then would be to use Marketocracy to find the high performing stocks.  You can set up your own virtual fund on marketocracy.  Your fund is forced to be balanced.  So you should have a balanced portfolio e.g. 10% high risk 50% stable with divident returns 40% growth potential stocks.  You could open an on lie share trading account and replicate a fund with your own money I'm guessing because you own the stock you can write one loss over a gain, and at the end of the year you pay tax at lower rate on the over all profit.  Other option is to open a spread betting account.  Pay no tax and gamble on the same stocks.


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## minion (11 Oct 2009)

SunnyH said:


> Thanks Ix that explains that.  So I guess you should only ever invest in a Rabodirect fund, if your positive its going to increase in value.  There are lots of hidden charges.  Rabodirect are not as transparent as they would lead consumers to believe.  My advice then would be to use Marketocracy to find the high performing stocks.  You can set up your own virtual fund on marketocracy.  Your fund is forced to be balanced.  So you should have a balanced portfolio e.g. 10% high risk 50% stable with divident returns 40% growth potential stocks.  You could open an on lie share trading account and replicate a fund with your own money I'm guessing because you own the stock you can write one loss over a gain, and at the end of the year you pay tax at lower rate on the over all profit.  Other option is to open a spread betting account.  Pay no tax and gamble on the same stocks.




I go for the spreadbetting option now.  I just bet on the sectors or the indexes.  I find its much the same as the funds, but without the tax.


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## John Walsh (28 Nov 2015)

I have the feeling that this method of self assessment is open to abuse . How do revenue check these funds are Rabo after 8 years required to make a return with your details.


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## Gordon Gekko (28 Nov 2015)

Rabo return details of the underlying investors to Revenue...


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## John Walsh (29 Nov 2015)

These details and what exactly is sent . When you ask Rabo they say nothing is sent only from current and deposit accounts.
I wish this bank would be more transparent in this regard all inquiries have the same answer 'its up to you to assess'. ?


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## Gordon Gekko (29 Nov 2015)

An intermediary (such as Rabo) submits a Form 8D annually to Revenue which sets out investors' names, addresses, PPS numbers, and payments received.

http://www.revenue.ie/en/tax/it/forms/prior-year/frm8d.pdf


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## John Walsh (29 Nov 2015)

Hi,
      Thanks for the reply this is exactly what I thought returns are made . 
What is the tax treatment if the investor is over 65 and can claim a dirt refund . I assume it is a capital gain so you would be taxed regardless. In that case such an investment for someone that is over 65 its better to go for an Irish domiciled fund to claim the dirt correct.


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## Sarenco (29 Nov 2015)

No, funds (Irish domiciled or otherwise) are not subject to DIRT and, in general, are not subject to income tax/CGT.  Funds are subject to a specific exit tax of 41% on realised gains, with a deemed disposal every 8 years.  

In my opinion, an investor with a lump sum and a low marginal income tax rate would be better advised to invest in a few high income investment trusts (such as City of London, Edinburgh, Murray Income, etc.).  For this purpose, it is worth bearing in mind that the first €18,000 (€36,000 if married/in a civil partnership) is exempt from income tax if you're over 65.

Here's a link to a video by JPMorgan that explains how investment trusts work but the key point is that they are subject to income tax/CGT and not subject to exit tax.

http://am.jpmorgan.co.uk/investment-trusts/explained/what-is-an-investment-trust.asp


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