First Active & Capital Gains Tax

First Active & Capital Gains Tax

We have just got a notice from The Revenue Commissioners asking for payment of Capital Gains Tax for the sale of the 495 free shares we got as a result of the take over of First Active Plc by the Royal Bank of Scotland. The amount is €359.80

However, we got our shares because my wife and I had a joint investment with First Active. The €3069 was paid into our ‘current account’ with First Active I understand we are due an exemption of (1270 x 2) which makes our tax liability €105.80

I am retired and my wife does not work outside the home.
Before my retirement, my wife did not work and I had all the allowances.

However, my wife’s name appears as a holder of a joint account with her brother who lives outside of Ireland. €3069 was also paid into this account. The reason that her name appears on the account is to facilitate correspondence. Morally she has no entitlement to this money.
€359.80 is due on this account.

I think we owe €105.80 on the first account and €359.80 on the second.

Is this correct?

My question is: Are we entitled to claim the joint exemption on the first account mentioned above.

When my wife pays the €359.80 on the second account she has to write her PPS number on the back.

Will this cause problems?

Thanks

First Active & Capital Gains Tax

> I am retired and my wife does not work outside the home. Before my retirement, my wife did not work and I had all the allowances.

This is irrelevant as it deals with income tax whereas what's relevant here is capital gains tax.

> However, we got our shares because my wife and I had a joint investment with First Active.

Do you mean that you jointly qualified for windfall shares as joint holders of a mortgage or investment/share account? Were the shars or nominee account in one or both names? If they were in both names then you should be able to use both personal annual CGT allowances. If not then you may only be able to use one since such allowances are not transferrable.

> However, my wife’s name appears as a holder of a joint account with her brother who lives outside of Ireland. €3069 was also paid into this account. The reason that her name appears on the account is to facilitate correspondence. Morally she has no entitlement to this money.
€359.80 is due on this account.

I'm not clear on what you're saying here. Is it that your wife's brother also qualified for shares the proceeds from which were paid into this account? Or that you wife was individually or jointly named on another set of windfall shares separate from the ones that you and her jointly (?) received?

What's important is not whose name(s) is (are) on the accounts into which the FA 2003 capital repayment and/or 2004 takeover payments were lodged but whose names were on the share certs or nominee accounts as this determines beneficial ownership of the shares and, consequently, who may be liable for CGT.

Thanks for the prompt reply.
I am not sure how to intersperse replies.

I just copied and pasted and put in > before your text.


>Do you mean that you jointly qualified for windfall shares as joint holders of a mortgage or investment/share account? Were the shars or nominee account in one or both names? If they were in both names then you should be able to use both personal annual CGT allowances. If not then you may only be able to use one since such allowances are not transferrable.

I am not sure why we qualified for shares. We invested in Tracker Bonds in 1998 and also opened a *joint* Instant Access Savings Account in November 1999.
I am sure the Tracker Bond investment was a joint investment. Every account we ever opened was a joint account.
However, The Ordinary Share Certificate dated 6 October 1998 that I have only has my name on it.


> However, my wife’s name appears as a holder of a joint account with her brother who lives outside of Ireland. €3069 was also paid into this account. The reason that her name appears on the account is to facilitate correspondence. Morally she has no entitlement to this money.
€359.80 is due on this account.

>>I'm not clear on what you're saying here. Is it that your wife's brother also qualified for shares the proceeds from which were paid into this account? Or that you wife was individually or jointly named on another set of windfall shares separate from the ones that you and her jointly (?) received?

In 1985 my wife's mother opened a joint account in (First National) for two of her children a son and a daughter who are in religious life. The daughter did not want her name to appear and so my wife allowed her name to be put first on the account. Consequently her name only appears on the ordinary Share Certificates dated 6 October 1998.

>What's important is not whose name(s) is (are) on the accounts into which the FA 2003 capital repayment and/or 2004 takeover payments were lodged but whose names were on the share certs or nominee accounts as this determines beneficial ownership of the shares and, consequently, who may be liable for CGT.

I feel that First Active used only the first named accoount holder even from joint accounts.

> am not sure why we qualified for shares. We invested in Tracker Bonds in 1998 and also opened a *joint* Instant Access Savings Account in November 1999.
I am sure the Tracker Bond investment was a joint investment. Every account we ever opened was a joint account.

I dount that the tracker bond qualified you for windfall shares. I'd say that the Instance Access Savings Account happened to be a share/investment account qualifying you for membership of the society and consequently windfall shares.

> However, The Ordinary Share Certificate dated 6 October 1998 that I have only has my name on it.

OK - if all of the shares were in your sole name then I'm afraid that you cannot use your wife's annual CGT allowance when calculating CGT - jut your own.

> In 1985 my wife's mother opened a joint account in (First National) for two of her children a son and a daughter who are in religious life. The daughter did not want her name to appear and so my wife allowed her name to be put first on the account. Consequently her name only appears on the ordinary Share Certificates dated 6 October 1998.

I presume that this is a different share allocation to the one with your name on it? If so then I assume that your wife qualified separately from you for windfall shares any any CGT arising from these is her own liability separate from yours above. Even if your daughter is the real beneficial owner of these shares I think that the fact that your wife's name appears on the certs means that CGT is her responsibility. However if the daughter actually received the takeover payment then presumably she will reimburse your wife for the CGT expenses?

> I feel that First Active used only the first named accoount holder even from joint accounts.

Yes - I think that's the case. So in this case you must have individually qualified for windfall shares hence the separate CGT liabilities/bills.

Does this make any more sense to you now? If your CGT situation is not complicated (e.g. by B&B repricing deals on FA shares, previously incurred losses etc.) then chances are that the Revenue letters have correctly estimated your respective CGT liabilities which you simply need to pay.

I didn't understand the bit about potential problems with your wife putting her PPS/RSI number on the CGT payment but if she is paying the liability in full then I can't see how such problems might arise?

I rang the Computershare helpline to get information on this area. I was told that according to The Building Societies Act and the Rules of the First National Building Society only the *first named person* on joint accounts was entitled to the free shares. If I try to claim relief because the qualifying account was in joint names I will probably be asked to prove that the shares are in joint names. As only my name appears on the share certificate it seems as if I will have to pay the full €359