Question on risk mitigation

jpd said:
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In this thread from a couple of years ago a similar discussion happened where @RedOnion brought up the averaged cost basis when disposing of an ETF, which in effect offsets losses for you, and you seemed to agree at the time that offsetting was possible? https://www.askaboutmoney.com/threads/etf-returns-irish-taxation.216738/post-1664956

Not trying to catch you out by the way, just curious about this.
 
Yes, you can use the average cost basis - but you can't swap and change between them, so whatever you use at first, will have to be used for the all future disposals of that ETF

Average cost will involve more calculations than the lot by lot basis

Honestly, t's a right pain - only I have some ETFs from a long way back, I'd probably stick to buying a diversifed bunch of blue chip and dividend stocks and hope for the best. 15 to 20 stocks across different industries would probably not be far off the overall market index
 
GSheehy said:
Where does it say/advise that?
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"Irish and Luxembourg UCITS²

Can losses be offset against gains for tax purposes?

Yes, within the same UCITS.
No, between different UCITS or against losses on other assets.

²The Irish domiciled UCITS is assumed to be an Exchange Traded Fund (ETF) not operating Irish exit tax."
 
Corola said:
Yes, within the same UCITS.
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One of the advantages of collective investments / unit linked funds is that you a gain on one fund/ETFs can be offset against a loss on another within the same product. Eg. 50 % in managed fund, 20% global index tracker 20% commercial property trust 10% global energy/metals ETF.

The general thrust of this thread is about stand alone ETFs but I may be misinterpreting the context of why you're including the information here.

Standard Life are in the collective investment space not the individual ETF platform space.
 
You can offset losses and gains on the same ETF.

In fact, somewhere in the back of my mind I think you can offset losses and gains within the same overall umbrella structure.

So if Yankee ETF and Aussie ETF are actually part of the same umbrella fund structure down in the IFSC, I think you can offset losses on one against gains on the other.
 
GSheehy said:
The general thrust of this thread is about stand alone ETFs but I may be misinterpreting the context of why you're including the information here.
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A standalone ETF is a collective investment in its own right, it doesn't need to be part of another collective investment to offset losses within itself.
 
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Yes, people are mixing-up investment bonds via life companies, where the tax is at policy level, and individual ETFs dealt on exchanges. Same 41% tax rate and broadly the same rules, but very different.

In a Zurich Investment Bond, I can switch from an underwater investment in Prisma 1 and effectively use that loss in my new investment in, say, Prisma 6.

But ETFs are standalone investments.

The fact that Standard Life seem to offer ETF exposure just confuses matters.
 
Gordon Gekko said:
In fact, somewhere in the back of my mind I think you can offset losses and gains within the same overall umbrella structure.
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From the same link:

"Fund switches within the same UCITS umbrella structure policy are not a disposal for tax purposes."
 
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Gordon Gekko said:
Yes, people are mixing-up investment bonds via life companies, where the tax is at policy level, and individual ETFs dealt on exchanges. Same 41% tax rate and broadly the same rules, but very different.
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The part I quoted is about individual ETFs, not investment bonds.
 
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For ETF's that you buy yourself (i.e. through Degiro etc.) you can not offset losses either against other ETF's or other stocks.
You can offset losses within the same ETF (i.e. You buy the same ETF in January at 10 and March at 20 and sell in May at 15, you can offset March losses against Jan).

For this reason, if you want to invest using ETF's (in Ireland) you should only pick one broadly diversified ETF to invest in.
 
AJAM said:
You can offset losses within the same ETF (i.e. You buy the same ETF in January at 10 and March at 20 and sell in May at 15, you can offset March losses against Jan).
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Do you have any confirmation of this in the tax code or on the Revenue site by any chance? There are replies in this thread with contradictory views on this point, but all written with conviction and authority so it's impossible to know which one is correct . I have sent Revenue a message to ask myself FWIW.
 
There isn't, but there's nowhere in the tax code or Revenue site that says two units of the same ETF must be treated as separate investments either. The only place I've seen that view is on here and on Reddit.
 
Corola said:
There isn't, but there's nowhere in the tax code or Revenue site that says two units of the same ETF must be treated as separate investments either. The only place I've seen that view is on here and on Reddit.
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Part 27-04-01 (https://www.revenue.ie/en/tax-profe...ains-tax-corporation-tax/part-27/27-04-01.pdf) says this -

"Where a loss arises on the disposal of a material interest in an offshore fund, no CGT or other loss relief is available [s.747E(3)]."

That seems like a fairly blanket statement denying any loss relief fullstop. But there's so much jargon in these things it's hard to really interpret what applies when.
 
Selling one unit in an ETF is a disposal of a material interest in an offshore fund.

Selling two units together of the same ETF is also a disposal of a material interest in an offshore fund (singular).

The rules aren't designed to be punitive to ETFs, I think common sense must prevail that the gain is considered at fund level not unit level.
 
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