What's the story with Example 2 here on revenue page?That's bizarre. The original Revenue page no longer exists, and is replaced by this one (which I presume you are looking at). It says:
First In, First Out (FIFO): If you hold shares of the same class (for example, ordinary shares) which you acquired at different dates, the oldest shares are treated as being sold first. This rule does not apply to shares sold within four weeks, which you may make a loss on. You will not be able to offset this loss against a gain made by you, however. You can only use the loss against a gain made when disposing of those specific shares.
The original page used to say, in paraphrase:
1. Shares sold within four weeks of acquisition are treated as the same shares (instead of FIFO), but CGT calculation is otherwise unaffected.
2. Losses on shares that are sold and reacquired within four weeks of sale are only offsettable against the reacquired share.
I'm struggling to make sense of the new wording, which seems to be a mishmash of the original two rules into one. However, the original sense can still be found in [broken link removed]:
The FIFO rules are modifed in any case where shares of the same class are bought and sold within a period of four weeks. Where shares are sold within four weeks of acquisition the shares sold are identifed with the shares acquired within that period. Furthermore, where a loss accrues on the disposal of shares and shares of the same class are acquired within a four week period, the loss is not available for offset against any other gains arising. Instead the loss is only available for set off against any gain that might arise on the subsequent disposal of the shares so acquired in the four week period - this provision does not apply where there is a gain on the disposal.
No no, that's not it!I think you are right, it looks like the example is totally wrong. Jane did not sell within 4 weeks therefore she is perfectly entitled to use that loss and carry forward into future
The example is in line with what is stated on the website. Jane bought and sold within four weeks and had a loss. She can only use that loss against gains on the same shares reacquired. She didn't reacquire any of the same shares so she cannot use this loss against anything.Shares bought and sold within a four-week period cannot be offset against other gains.
You can only deduct the loss from a gain made on a subsequent disposal of same-class shares acquired within the four weeks.
No no, that's not it!
To be clear both Jane and Kevin did sell within 4 weeks of acquisition. (1st April 2017 & 14th April 2017 is 2 weeks apart).
But only Kevin re-acquired within the next 4 weeks (21 April 2017). Hence his loss is restricted.
Jane did not re-acquire within the 4 weeks. Hence her loss is not restricted.
The example is confused mess that is trying and failing epically to show both the 4 week rule for buy & selling and the separate 4 week rule for selling & re-buying.
When shares are bought and sold within 4 week period:
TCA 1997 581 (1) & (2) states that typical FIFO is disregarded for LIFO. Simply put, the shares you sold, are the ones you acquired within last 4 weeks. It simply deals with share identification as the anti avoidance measure, rather than loss disallowance.
In practice this will only be relevant if you held shares from long time ago, beyond last 4 weeks (e.g. a year ago). Neither Jane nor Kevin held shares previously, so this rule doesn't have any actual visible effect on Jane or Kevin in this example.
Whether there is a loss or a gain on shares bought and sold within last 4 weeks is entirely separate matter and typical CGT rules apply. Gains are taxable. Losses are allowable against other gains.
When shares are sold and re-bought within 4 week period:
TCA 1997 581 (3) states that loss is ringfenced to the re-bought shares.
Only Kevin re-bought, thus it applies to Kevin only.
Jane did not re-buy, thus it has zero impact on her. Her previous loss is still allowable.
What i think happened:
Is that the example was suppose to have the intention to compare Jane to Kevin and precisely show that Jane's loss is allowable, while Kevin's is disallowed.
The entire example could literally be fixed if you just change one word from:
"She cannot set her loss against any gain she may make"
change to
"She can set her loss against any gain she may make"
and that would fix the entire example. imagine if it's as simples as that one typo haha
The normal rules of identification apply to any excess where the quantity disposed of exceeds the quantity recently acquired. In the event of a sale of shares followed by a re-acquisition within four weeks a loss on the sale will be allowed only against gains derived from the disposal of the shares re-acquired within four weeks. Where the reacquisition involves a fraction only of the shares sold the restriction will be confined to a corresponding fraction of the loss.
(3) Where a loss accrues to a person on the disposal of shares and such person reacquires shares of the same class within 4 weeks after the disposal, that loss shall not be allowable under section 538 or 546 otherwise than by deduction from a chargeable gain accruing to such person on the disposal of the shares reacquired...
Incorrect.Jane's loss is not usable at all.
precisely! the entire goal, the entire spirit of the 4 week rule is stop people from realising losses on the assets they continue to hold.So it should say "Shares sold and bought within a four-week period cannot be offset against other gains"
Not bought and sold. If the goal is to stop people realising losses on assets they continue to hold.
precisely! the entire goal, the entire spirit of the 4 week rule is stop people from realising losses on the assets they continue to hold.
Jane sold out, so she does not continue to hold. so it makes no sense if she can't use the loss.
I would like it be i tiny bit more precise just to really drive it home the point and say "re-bought" so:
"Shares sold and re-bought within a four-week period cannot be offset against other gains"
since "re-bought" is same as "re-acquired" and "reacquired" is the price wording in the Tax and Duty Manual (TDM). it's nitpick, but i'm all about technicalities haha
And of course, additionally they should actually provide another example, proper separate example for the 4 week rule regarding shares that were bought and sold within 4 weeks - where FIFO change to LIFO.
For anyone curious, on top of TDM & the legislation, if you're still not convinced, i've got here actual 2024 lecture slides from chartered accountants Ireland as well confirming same:
View attachment 8770View attachment 8771
As you see, there are two separate rules. Jane's case is "Disposal within 4 weeks of acquisition" and says nothing about losses being disallowed.
Meanwhile Kevin re-acquired, so "Acquisition within 4 weeks of disposal" applies to Kevin and his losses are restricted to re-bought shares.
I'm entirely bewildered why revenue website example is wrong. I'm gonna query the lecturer on Monday and see if he has any insight, but I mean from every other official source I could look at so far, nothing says Jane's loss is disallowed - except that example on the website!
I've phoned Revenue and tried to ask them whats the story with the example. The lady basically just directed me to make an MyQuery about it, but I've asked in case if website and TDM (& legislation) disagree, which then should be the "source of truth" to follow? She said it should basically be the TDM & legislation (naturally...).
And just so you guys are aware, afaik Revenue is basically not liable for presenting inaccurate information on their website. Because other alternative sources exist (TDM, the legislation etc.) they can very easily say that you could have used alternative sources of info to find the right information! So use the website with caution and if in doubt always check TDM or better yet - the legislation.
Ironically I would personally not go to a "regular" accountant to cross check things like that. Some foreign accountants as well, sadly are unlikely to know the Irish specific rules. I know for fact at least one foreign accountant living in Ireland, with 20+ years experience, was not aware of Irish specifics regarding 4 week rule!
So any CGT queries I would direct them to Chartered Accountants Tax Advisers.
Did you ever get an answer? Is Jane allowed to use her loss? I believe she is and the revenue have made a mistake with their example. I would be interested in throwing few more questions your way if you are in a position to answer.precisely! the entire goal, the entire spirit of the 4 week rule is stop people from realising losses on the assets they continue to hold.
Jane sold out, so she does not continue to hold. so it makes no sense if she can't use the loss.
I would like it be i tiny bit more precise just to really drive it home the point and say "re-bought" so:
"Shares sold and re-bought within a four-week period cannot be offset against other gains"
since "re-bought" is same as "re-acquired" and "reacquired" is the price wording in the Tax and Duty Manual (TDM). it's nitpick, but i'm all about technicalities haha
And of course, additionally they should actually provide another example, proper separate example for the 4 week rule regarding shares that were bought and sold within 4 weeks - where FIFO change to LIFO.
For anyone curious, on top of TDM & the legislation, if you're still not convinced, i've got here actual 2024 lecture slides from chartered accountants Ireland as well confirming same:
View attachment 8770View attachment 8771
As you see, there are two separate rules. Jane's case is "Disposal within 4 weeks of acquisition" and says nothing about losses being disallowed.
Meanwhile Kevin re-acquired, so "Acquisition within 4 weeks of disposal" applies to Kevin and his losses are restricted to re-bought shares.
I'm entirely bewildered why revenue website example is wrong. I'm gonna query the lecturer on Monday and see if he has any insight, but I mean from every other official source I could look at so far, nothing says Jane's loss is disallowed - except that example on the website!
I've phoned Revenue and tried to ask them whats the story with the example. The lady basically just directed me to make an MyQuery about it, but I've asked in case if website and TDM (& legislation) disagree, which then should be the "source of truth" to follow? She said it should basically be the TDM & legislation (naturally...).
And just so you guys are aware, afaik Revenue is basically not liable for presenting inaccurate information on their website. Because other alternative sources exist (TDM, the legislation etc.) they can very easily say that you could have used alternative sources of info to find the right information! So use the website with caution and if in doubt always check TDM or better yet - the legislation.
Ironically I would personally not go to a "regular" accountant to cross check things like that. Some foreign accountants as well, sadly are unlikely to know the Irish specific rules. I know for fact at least one foreign accountant living in Ireland, with 20+ years experience, was not aware of Irish specifics regarding 4 week rule!
So any CGT queries I would direct them to Chartered Accountants Tax Advisers.
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