# Tax on shares



## TomOC (4 May 2009)

I have a couple of questions in relation to share purchasing and would be very grateful for any answers.
If I purchase shares as a PAYE assessed employee, will I always be self assessed for tax until all of my shares have been disposed of? Is the paperwork manageable without accountant?
If I am PAYE assessed for tax should I be paying any tax after DIRT on interest income? 
If I am self assessed for tax will I have to pay any tax after DIRT on interest income? If so how much, surely not at marginal tax rate of 20 or 41% on top of DIRT? Would I pay income levy on it only?
When paying capital gains tax on shares what expenses can you claim against it? Broker fees? Stamp Duty on the purchase?
Is it correct that CGT losses can be carried forward indefinitely to offset gains? Only thing is CGT losses must be used against any gains before the CGT exemption of 1270 can be used?
Is CGT and stamp duty taxed differently if shares sold within a short period of 10 days? 
Could anyone also please give me ideas if this looks correct below?

01/01/2008

buy 1000 shares at 1.5 euro-1500

Stamp duty (1%)-15

Broker-20

01/05/2008

buy 1000 shares at 2 euro-2000

Stamp duty (1%)-20

Broker-20

01/08/2008

sell 1500 shares at 2.50 euro-3750

Broker-35

Based on FIFO, I first sell the first 1000 (bought 01-01-08) then 500 of those bought 01-08-08
Selling Price-3750

Bought 01/01/2008
Cost -1500

Bought 01/05/2008
Cost (Half total) -1000

Gain 1250


Subtract Costs
Bought 01/01/2008 -35

Bought 01/05/2008 (Half) -20

Selling 01/08/2008 -35


Capital Gain (tax payable @22% or 25?) 1160


1160 is less than the 1270 exemption so no tax payable if no more disposals that year
If exemption already used the CGT= 25%? of 1160= 290

Thanks for help

Tom


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## Gervan (4 May 2009)

TomOC, that's quite a collection of queries, and not many refer to purchase of shares.
Unless the purchase of shares is related to shares allocated by the company employing you, it would not change your status to self-assessed. If you have been allocated options etc from your company, you would have to make a return in that year. It should not need the services of an accountant, as the company usually provides all the information you would need.
DIRT fulfils the tax liability on interest. There is no higher rate of tax, but there is a health levy on interest.
The basic tax rate cut off point is raised to include your interest income, no matter how high. There is no income levy on deposit income.
Yes, you can claim broker fees and stamp duty as expenses in CGT computation, and carry forward losses indefinitely.
There is a CGT restriction when shares are bought and sold within 4 weeks, that over-rides the FIFO rule. Also, if you sell at a loss, and buy back within 4 weeks, that loss may only be used when those particular shares are disposed of. 
I do not know of any Stamp duty peculiarities in quick sales.
The CGT calculation looks correct. The rate applying at 01/01/08 was 20%. It increased to 22% on 15/10/08.


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## TomOC (5 May 2009)

Gervan said:


> TomOC, that's quite a collection of queries, and not many refer to purchase of shares.
> Unless the purchase of shares is related to shares allocated by the company employing you, it would not change your status to self-assessed. If you have been allocated options etc from your company, you would have to make a return in that year. It should not need the services of an accountant, as the company usually provides all the information you would need.
> DIRT fulfils the tax liability on interest. There is no higher rate of tax, but there is a health levy on interest.
> The basic tax rate cut off point is raised to include your interest income, no matter how high. There is no income levy on deposit income.
> ...


 
Hi Gervan

Thanks very much for this info, very much appreciated.  
Shares will not be from the company i work for and will be bought off stock exchange.  They may be disposed of quickly depending on share prices however chances are some will be held for years.  Just another one or 2 questions!

Should the health levy be paid on interest regardless of being self assessed or PAYE assessed?
Is it a case that from when I first sell shares until they are all disposed of that I will have to make a yearly self assesment return to revenue or do I only make a return yearly upon disposal of shares?

In relation to your note below. 

(Quote) There is a CGT restriction when shares are bought and sold within 4 weeks, that over-rides the FIFO rule. Also, if you sell at a loss, and buy back within 4 weeks, that loss may only be used when those particular shares are disposed of. 
I do not know of any Stamp duty peculiarities in quick sales (end quote)

Sorry but I am slightly lost on this point.  What are the implications for CGT if I buy and sell within 4 weeks.  What is the "CGT Restriction" applied.  

Also is it correct that CGT losses must be used against any gains before the CGT exemption of 1270 can be used?

I have not bought any shares yet.  In relation to the CGT rate has it been increased from 20% to 22% on 15/10/08. Has it since in the April budget been increased to 25%?

Sorry again for all the questions.  Thanks again for help
Tom


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## Gervan (6 May 2009)

1. The health levy should be paid on interest whether self-employed or PAYE. It's just that Paye workers do not have to make a return, so this usually slips by. 

2. If there is no disposal you do not have to make a return. A CGT return (Form CG1) is only required when you sell your shares. If you had had a CGT liability on your disposal of 01/08/08, you would have had to pay the tax due to Revenue by 31/10/08, but the return would not be due till 31/10/09.
Liability in respect of disposals between 01/10/08 and 31/12/08 was due by 31/01/09
Liability in respect of disposals between 01/01/09 and 30/11/09 is due by 15/12/09.

Irrespective of whether you have submitted a payment, or whether the gain is relieved from tax or a loss arises on the disposal, you must submit a tax return to Revenue in respect of any disposals. Generally the tax return is due by 31st October in the year following the calendar year in which the disposal was made.

3. You have used the FIFO rule in your calculations in the original post. 
However, say you held 1000 AIB shares, bought in 2007 at €20 each. The price is now €1. You buy 1000 shares, and sell them at the same price two weeks later. This does not give you a loss of €19,000, to be used against other gains you might have, because the shares you sold will be identified with the ones bought within 4 weeks of the sale. This restriction of the 4 week rule prevents you crystallising a loss, while still being in the same position i.e. holding 1000 AIB shares.

4. Yes, losses brought forward or arising in the same year must be used before the CGT exemption.

5. Yes, from the date of the budget CGT went up to 25%.

For FAQ : http://www.revenue.ie/en/tax/cgt/faqs.html#section13


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## TomOC (6 May 2009)

Thanks again Gervan


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## margaret1 (15 May 2009)

Hi Gervan, 

Would I be correct in thinking that if a person purchased shares a number of years ago,say 1000(which are currently worth less than initially purchased),then purchased a further 500 shares in the same company and sold 500 shares within 4 weeks for a profit,then CGT would be due on the profit? Also when submitting tax return is it best to include a copy of the shares transactions required for excemption from the FIFO rule.


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## Gervan (15 May 2009)

margaret1 yes, if the shares are of the same class, the 4 week rule would identify the shares sold as being the ones you had bought within the four weeks. If you wait 30 days and sell the 500 you would have a CGT loss instead.
The legislation also says that this operates in the case of a married couple where one partner buys shares, and the other sells identical shares within the 4 weeks. 
Normally you do not have to send in documentation re sale of shares when completing a return; I would just keep copies of everything in case a query arises. And seeing how far back recent investigations have gone, keep for life.


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## margaret1 (15 May 2009)

Thank you Gervan.


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## JohnSteed (20 May 2009)

Hi all,
Reff setting share losses..

If you have sell shares from company A at a profit and a few months later buy and sell shares from company b at a loss,  can you offset the loss from company b against profits made from company A?

If not, can you offset losses from company b against profits made on company c a few months further on?
Tks!


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## Gervan (21 May 2009)

If your loss and gain arise in the same tax period you can offset. If the loss is not fully used up, it can be carried forward indefinitely for use against gains in future tax periods.


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## JohnSteed (24 May 2009)

Thanks Gervan.


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## dubmark74 (7 Jul 2009)

Hi,

A question i cannot seem to find an answer to:

If you pay CGT on profit from shares in 2007 and then make a loss in 2009, can you off set the loss and get some of the CGT paid back?

Thanks, Mark.


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## Sunny (7 Jul 2009)

dubmark74 said:


> Hi,
> 
> A question i cannot seem to find an answer to:
> 
> ...


 
Simple answer is no.


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## WaterSprite (7 Jul 2009)

Sunny said:


> Simple answer is no.



correct - you cannot carry gains forward, only losses.


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## Gervan (7 Jul 2009)

Unless you die, in which case losses can be carried back three years. Taxwise, death can be quite beneficial.


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## JOHNP (8 Aug 2009)

*Re: Tax on shares 4 week rule loss*

Hi
Im a bit confused re the 4 week rule re shares. My situation is this I  on the same day bought 3 seperate amounts of shares in the same company. A few days later I sold 1 of the 3 amounts and made a loss. The next day 
I sold the remaining 2 amounts and again made a loss. For 5 weeks I did not purchase any more shares in this particular company. Can I use the loss obtained by the sales against any CGT gains due?  Any help would be 
greatly appreciated!! Many thanks!


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