There's an attractive tax-advantaged share purchase scheme which has run for many years, APSS (Approved Profit Sharing Scheme). In basic terms you buy up to €12,700 in company shares through your bonus and salary-sacrifice, free from PAYE/Income tax. Providing you don't touch these shares for 3 years, they're yours to keep thereafter.
Many of us would like to see ISA-like schemes setup in Ireland, however as is often the case in life, it's easier to build upon something which already exists, than to try to try to start from scratch with something new. As there is precedence for this type of share purchase scheme, why not expand it so that all tax payers can avail?
The existing approach has a few issues which would need to be worked out - the burden on employers to pay for its admin, the limitation on individual company shares which can be purchased, the complex calculations for the percentage bonus / salary that can be used etc. Simplification would be key, for employees, anyone can salary-sacrifice up the revenue limit to buy any shares they so choose. For the employer, to limit their obligation to the facilitation of payroll deduction, in a similar manner to existing pension arrangements, the bike-to-work scheme, travel-saver tickets etc. Anyone selling the shares before 3 years had elapsed would owe the income tax back, along with any CGT.
At the core of this is the principle of fairness, allowing a select number of workers be take part in a tax advantaged share scheme, and not others, is exclusionary. The outcomes would be better too, as individuals would avoid concentration risk in having both their employment and wealth tied to one company. There would be reduced admin costs for employers compared to today's scheme, and it would promote investing / wealth creation which can reduce dependence on the state for individuals later in their life.
Many of us would like to see ISA-like schemes setup in Ireland, however as is often the case in life, it's easier to build upon something which already exists, than to try to try to start from scratch with something new. As there is precedence for this type of share purchase scheme, why not expand it so that all tax payers can avail?
The existing approach has a few issues which would need to be worked out - the burden on employers to pay for its admin, the limitation on individual company shares which can be purchased, the complex calculations for the percentage bonus / salary that can be used etc. Simplification would be key, for employees, anyone can salary-sacrifice up the revenue limit to buy any shares they so choose. For the employer, to limit their obligation to the facilitation of payroll deduction, in a similar manner to existing pension arrangements, the bike-to-work scheme, travel-saver tickets etc. Anyone selling the shares before 3 years had elapsed would owe the income tax back, along with any CGT.
At the core of this is the principle of fairness, allowing a select number of workers be take part in a tax advantaged share scheme, and not others, is exclusionary. The outcomes would be better too, as individuals would avoid concentration risk in having both their employment and wealth tied to one company. There would be reduced admin costs for employers compared to today's scheme, and it would promote investing / wealth creation which can reduce dependence on the state for individuals later in their life.