No one was forced to sell anything. If they were trying to avoid paying tax on deemed disposal why would they make an actual disposal - what does that achieve?
Officials recommend scrapping deemed disposal and lowering tax on investment funds
- Thread starter Brendan Burgess
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For those following financial reports a little longer how positive does this sound. Has there been similar reports in the past?
Obviously a change in government may have an impact. Would a FG minister support it or want a new study. Have SF ever commented on the issue?
The lack of ISA or similar is a big blow and would have been easier to sell. Canada allow $5k tax free investing per year. That adds up nicely for young people. You have an available tax free investment if over 60k by the time you hit 30 if you were 18 when it came in. Even if not investing you don’t pay DIRT etc. Not as good for older folks.
Would people be confident we will see the change within 8 years.
Obviously a change in government may have an impact. Would a FG minister support it or want a new study. Have SF ever commented on the issue?
The lack of ISA or similar is a big blow and would have been easier to sell. Canada allow $5k tax free investing per year. That adds up nicely for young people. You have an available tax free investment if over 60k by the time you hit 30 if you were 18 when it came in. Even if not investing you don’t pay DIRT etc. Not as good for older folks.
Would people be confident we will see the change within 8 years.
I completely agree with you. Ironically enough the changes would even benefit smaller investors more than bigger, wealthier investors given how it facilitates diversification. I really hope it changes soon. Funds are a much better way to invest for most people and the current system is just rubbish.
The current system, as originally implemented was great. Gross roll up, 23% exit tax on growth, no deemed disposals.
I agree that it’s mainstream but TDs seem to live or at least hear from a different reality.
Yesterday we were told that greyhound racing is part of the social fabric of the country and how amazing the doggy men are.
I image the number of people in Ireland with an app for EFTs etc on their phone is far greater than attend the dogs but they don’t register with TDs usually.
Isn't it 41% exit tax on growth? Or do you mean that it was 23% at some point in the past?
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Fibbernacci
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It's interesting. I backed out of a trust fund for my daughter before because 41% plus a deemed disposal seemed too high. Plus I wasn't considering an S&P 500 tracker because of DD either.
fistophobia
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I think Chambers wants be seen as progressive.
I am thinking of writing to him about it, giving him good feedback.
I happen to know his personal assistant, very well.
I am thinking of writing to him about it, giving him good feedback.
I happen to know his personal assistant, very well.
I wrote to him weeks before budget and didn't hear back yet....expect office has been busy with his recent elevation, budget and now General Election.
It was originally introduced in 2001, and the tax rate was standard rate plus 3%. When the bad times came, the plus 3% was increased a few times before being replaced with it's own rate, and deemed disposals being added.Isn't it 41% exit tax on growth? Or do you mean that it was 23% at some point in the past?
Taxes and charges - CCPC Consumers
The Competition and Consumer Protection Commission is an independent statutory body that enforces competition and consumer protection law in Ireland
Some people will start buying ETFs from now in anticipation that in 8 years the tax will be lower and simplified. Now you can invest in reasonable hope that the taxation won't be as bad, and even if nothing happens at least you're investing.
The main downside with deemed disposal + 41% + no offsetting losses was that people who should have invested in something, invested in nothing.
If deemed disposal was yearly - you'd probably wait to see if the recommendations are followed. But with 8 years, that's two or more governments having the chance to fix the problem - so there's less justification for waiting.
The main downside with deemed disposal + 41% + no offsetting losses was that people who should have invested in something, invested in nothing.
If deemed disposal was yearly - you'd probably wait to see if the recommendations are followed. But with 8 years, that's two or more governments having the chance to fix the problem - so there's less justification for waiting.
Deemed disposal has been around since the finance act in 2006 - it had a pre-crash introduction, and applied from funds bought in 2001 so the first round of deemed disposals started to happen in 2009. Some info here from 2011 https://www.irishtimes.com/news/consumer/fund-manager-seeking-tax-on-deemed-disposal-1.586446
Isn't the idea that exit tax should be a few points above other taxes on returns, to compensate for the gross roll-up?
What do people think might happen?
(1) exit tax on managed funds and self-declared ETFs reduced from 41% towards the 33% CGT rate, but deemed disposal kept at 8 years?
(2) exit tax and deemed disposal both abolished, and replaced with a new tax regime? Normal income tax and CGT on returns from ETFs? But how are returns from managed funds taxed?
(3) something else I can't think of...................
What do people think might happen?
(1) exit tax on managed funds and self-declared ETFs reduced from 41% towards the 33% CGT rate, but deemed disposal kept at 8 years?
(2) exit tax and deemed disposal both abolished, and replaced with a new tax regime? Normal income tax and CGT on returns from ETFs? But how are returns from managed funds taxed?
(3) something else I can't think of...................
The report says deemed disposal removed and tax rate aligned with the CGT rate, with limited loss relief. So not exactly the income tax + CGT regime. It's not clear how paid out dividends would be taxed or that the same €1,270 exemption would apply.
In the same way as ETFs, including removing the 1% levy.
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When the current regime was brought in, the previous system remained in place for funds already purchased. There are still people out there with funds taxed on the old pre 2001 basis. Would the government put a third regime into place?
Changing the rate from 41% to 33% and removing future deemed distributions would allow the current regime to remain in place after those changes.
Doesn't this proposal swing too far in the other direction? Funds would be taxed more favourably than a basket of individual shares. Dividends net of withholding tax would roll-up in the fund then be taxed at 33% (CGT), whereas individual share dividends would be taxed at 52% (marginal rate).
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yellowmoose
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why can't the dividends be taxed at the marginal rate regardless of whether they are distributed or rolled up? Is that what happens in the UK?