Deemed asset indexation and payment

Dorian

Registered User
Messages
5
Asset:
UK fund (OEIC) bought in 1998

Deemed Disposal Date:
Moved to Ireand from UK 7 years ago so I assume in 1 year.

1. Can you index the cost price like with shares?

2. When the invesment deems, there are no other savings to pay the tax bill, so will the asset have to be sold to pay the tax bill?

Please tell me this is wrong, I can't believe that revenue want to induce the real sale of an investment (at a market low) to pay a tax bill on a theoretical sale?!

thanks
Dor
 
Q1. No
Q2. Yes and to make matters worse, or maybe better, the gain on the sale is taxed as well - or if it is a loss, you can reclaim some of the tax on the deemed disposal
 
Asset:
UK fund (OEIC) bought in 1998

Deemed Disposal Date:
Moved to Ireand from UK 7 years ago so I assume in 1 year.

1. Can you index the cost price like with shares?

2. When the invesment deems, there are no other savings to pay the tax bill, so will the asset have to be sold to pay the tax bill?

Please tell me this is wrong, I can't believe that revenue want to induce the real sale of an investment (at a market low) to pay a tax bill on a theoretical sale?!

thanks
Dor

Depends on where you buy the asset. If it is with a life company, they will deduct the tax from your fund. If you buy it through a fund platform, stockbroker, you can pay the tax through your own cash.

The real issue is the lack of choice for the investor. The Revenue should provide two options:

1. Gross Roll Up - all dividends and profits are reinvested into the fund automatically. Theoretically, it could be decades before the Revenue sees ANY income from the investment, so the 8 year Deemed Disposal applies.

2. Distributing - tax is paid each year on dividends and profits. The Revenue are getting their regular income, so deemed disposal doesn't apply

It's not that hard.

Steven
www.bluewaterfp.ie
 
Thanks jdb and SBarrett.

Steven: The investment was with the fund directly in the UK when living there, and is still held with them in the UK. I'm not sure I'm qualified to comment, but I wouldn't mind seeing a third option of just taxing dividends (dist or acc) and only taxing gains when realised. Making a long term investment for retirement seemed like a good idea, but it's hard to plan cashflow on a state pension for an unknowable tax bill every 8 years. More so given this is a new tax applied retrospectively, so you couldn't have planned for it anyway! (Ironically this was a tax free UK ISA!). Thanks again

jdp: shame about the indexing, that would have helped a little. And if the gain on the sale is taxed, then the whole investment has to be sold, no other way to pay, so that's simple.
re:deemed disposal date, a link on another thead to a Revenue document called "EFT's guidance note" says "a taxable event is deemed to take place on the ending of the 8 year period beginning with the date of investment in the ETF, and on every subsequent 8 year period" - so assuming this is the same treatment, that would mean 2022 just as you suggested, thanks again.

Dor
 
U.K. ISAs should be sold prior to becoming tax resident in Ireland in order to simplify matters.
They are tax free in the U.K. and as a non-Irish resident no tax would be due.

By continuing to hold the ISA what you do is take a previously tax free U.K. investment and expose it to Irish tax on the income and gains at a rate of 41% even if you don’t sell the underlying holding.

The best course of action is always to sell BEFORE moving to Ireland and take specialist advice on how best to restructure your finances for your new life in Ireland.

The longer that is delayed the worse matters get.

[broken link removed]
 
Last edited:
Thanks Marc - unfortunately some well meaning but incorrect advice many years ago means we are now in the situation we are in. Low income, so nowhere near incurring income tax, but a capital gain taxed at 41% with no inflation relief.
I can see no other option but to sell the investment and pay the tax now.

I appreciate the time taken by everyone to offer up their knowledge, it's really hard to figure any of this our from the revenue.ie website!
 
It’s a salutary lesson once again of the risks of well-meaning but unregulated, uninsured and potentially ill-advised opinions masquerading as advice
 
Could the remittance basis of taxation or similar apply here? With potentialy no Irish tax due?
 
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