T McGibney
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52% on income and 33% on inflation and gains are both utterly draconian too.
No wonder the country is fast becoming a desert for investments outside the 12.5% CT sector.
52% on income and 33% on inflation and gains are both utterly draconian too.Is 41% really all that draconian?
I stick €100,000 in today, I’ve no tax on anything for 8 years and then 41%. Is that better or worse than 52% on income as you go along plus 33% on any gains?
thats the key point that taxation policy is supposed to be fair and open. Many people that move to Ireland are unaware of these Ireland specific taxation issues because they are so seperate to every other comparable developed country. Even in the 1980s when the country was on its knees with high unemployment rates we had allowances for inflation and indexation and no deemed disposal on assets that were not soldIt's doubly draconian as there are no allowances to use losses incurred in any funds to offset gains on others. Taxation is supposed to be fair, this system is totally unfair.
Fairness is subjective. I don’t think it’s fair that I pay 52% on the income I earn while somebody living off the capital gains they inherited only pays 33%. I don’t think it’s fair that I will have to pay CGT on assets I sell in my lifetime to support my children, while wealthier individuals can just keep rolling up their gains indefinitely before skipping CGT altogether when they pass the assets to their children as inheritance.thats the key point that taxation policy is supposed to be fair and open
I'm open to ideas on better tax systems, and do not doubt that there are examples where the current one is unfair, but this seems like it might be an exaggeration. If they are actually "wealthier individuals" who are providing their children with enough to live "off the capital gains they inherited", then the majority of that inheritance will presumably be above the tax-free threshold, and so won't the children have paid the equivalent of CGT in inheritance tax when they inherited it? If a parent sold the asset and paid CGT before the children inherited it, the value inherited decreases by the amount of CGT paid, so the inheritance tax will be lower, but the total amount of tax paid (by parent and children combined) will be about the same, won't it?skipping CGT altogether when they pass the assets to their children as inheritance.
I’m doubting myself now, but taking an asset that cost €50k and is now worth €100k in the two scenarios. For simplicity let’s assume there are other assets in both cases, so the taxfree inheritance allowance is used up already. And ignore the annual CGT allowance for simplicity.I'm open to ideas on better tax systems, and do not doubt that there are examples where the current one is unfair, but this seems like it might be an exaggeration. If they are actually "wealthier individuals" who are providing their children with enough to live "off the capital gains they inherited", then the majority of that inheritance will presumably be above the tax-free threshold, and so won't the children have paid the equivalent of CGT in inheritance tax when they inherited it? If a parent sold the asset and paid CGT before the children inherited it, the value inherited decreases by the amount of CGT paid, so the inheritance tax will be lower, but the total amount of tax paid (by parent and children combined) will be about the same, won't it?
In Ireland people pay the higher rate of tax at 40 thousand euros much lower level than most countries, in the UK you don't hit the higher rate until £50 thousand and much lower CGT rates aswell along with large CGT tax free allowances. Its not a one or the other situation as Ireland is an outlier in all these areas because we charge higher taxation to middle income earners.Fairness is subjective. I don’t think it’s fair that I pay 52% on the income I earn while somebody living off the capital gains they inherited only pays 33%
Yes I’ve already agreed with you that how ETFs are taxed for the small guy is not right. I’m just saying that how regular shares are taxed isn’t ideal either, so rather than throwing out deemed disposal and exit tax which address some of the issues it should be reformed.not for the small guy in Ireland thats wants to invest a small some of money in those very ETFs. Thats whats not fair
Weatlh would migrate away from real democracies.. Only real democracies would be allowed participate.
Deemed disposal is the problem, and in future years I'm expecting a much larger set of people hit by lack of compliance, simply because actually complying is problematic to impossible given Revenues changing opinions on how to calculate it. Anything beyond a single purchase has gotten differing responses from Revenue on how to handle over the years.Yes I’ve already agreed with you that how ETFs are taxed for the small guy is not right. I’m just saying that how regular shares are taxed isn’t ideal either, so rather than throwing out deemed disposal and exit tax which address some of the issues it should be reformed.
Personally I think leave DD and exit tax in-place and potentially expand it to other asset classes, but introduce something like the UK’s ISA for the small guy so they never have to deal with it.
Sorry but I’m not clear what point you’re making? We’ve agreed DD could do with being simplified and clarified, and we’ve agreed that going back to CGT taxation would mean more profit for investors.Deemed disposal is the problem, and in future years I'm expecting a much larger set of people hit by lack of compliance, simply because actually complying is problematic to impossible given Revenues changing opinions on how to calculate it. Anything beyond a single purchase has gotten differing responses from Revenue on how to handle over the years.
I know personally I'd gladly take the option to just drop DD and take all profits out as income. Less reporting overhead, more profit for me over the longer term, and a lot more tax for Revenue too.
I'd agree and that's not even counting our large immigrant workforce - who also want to invest their savings in sensible products like ETFs.Deemed disposal is the problem, and in future years I'm expecting a much larger set of people hit by lack of compliance, simply because actually complying is problematic to impossible given Revenues changing opinions on how to calculate it. Anything beyond a single purchase has gotten differing responses from Revenue on how to handle over the years.
I know personally I'd gladly take the option to just drop DD and take all profits out as income. Less reporting overhead, more profit for me over the longer term, and a lot more tax for Revenue too.
It’s relatively straightforward for an irish resident foreign national who is non domiciled to legitimately invest their savings tax free offshore taking advantage of the existing remittance basis of taxation.I'd agree and that's not even counting our large immigrant workforce - who also want to invest their savings in sensible products like ETFs.
Say you're Italian and you've working in Ireland for a decade or so, what is revenue going to do if you didn't pay DD and you're gone back home with no intention of ever working here again.
Also what is the Italian revenue going to say if you tell them you don't owe tax there because you've already paid tax on imaginary gains via a uniquely stupid system. (DD - che cosa?)
In my experience some foreign workers here, who intend to leave the country permanently, occasionally ignore self disclosure taxes like DD. It's conceivable that depending on where they live and tax treaties it could mean they pay double tax if they pay it here.
Fortuitous given the concerns that now abound wrt. the taxation of unrealised gains, good man Charlie! Seriously though, I don’t think the origins of a tax are too important provided it is still relevant, though it is interesting to know.Remember that the Exit Tax system was introduced almost exclusively with life products in mind as Brussels forced McCreevey to close down the old "I - E" system. DD was not part of the original introduction. But then some stockbroker circulated all its rich clients with a flyer screaming "wrap a life belt round you". They had spotted immediately that being able to roll up income gross indefinitely would totally clean up with HNW individuals through the likes of Personal Portfolio Bonds. McCreevey was absolutely hopping mad and felt the negotiators on the life company side had stitched him up. Something like DD had to be introduced and they also moved against PPBs.
All the same, there can never be a situation where income is allowed to roll up gross indefinitely and the life companies will never accept deemed distribution.Fortuitous given the concerns that now abound wrt. the taxation of unrealised gains, good man Charlie! Seriously though, I don’t think the origins of a tax are too important provided it is still relevant, though it is interesting to know.
McCreevey was absolutely hopping mad and felt the negotiators on the life company side had stitched him up.