Capital Gains Tax on Shares

The Pontiac

Hi,

I was just going through my share dealings for 2010 and it's all a little confusing to me. The only gains I've made were in the latter period (1 December to 31 December) so tax will be due by 31st January.

The majority of my share dealings were in sterling and were settled in sterling, so I would have to transfer the rates on said date to euro. I'm also not sure how to offset the losses against gains etc.

I've made about 30 transactions during 2010. So my question is - how much would an accountant charge me to do my returns as I don't want to get ripped off. If the fees are excessive maybe I'm better off tackling this myself, but would prefer to get it done by an accountant to make sure it's all done right.

Thanks

Alan Shore

Well,

If you compute the gain or loss on each sale then deduct the losses from the gains. If you are in receipt of dividends you need to make a tax return on these. An accountant would charge 250 - 300 plus VAT for a job like this.
You should also consider whether your activity is in fact a trade and subject to income tax.

The Pontiac

Hi Alan,

Thanks for your reply. I don't think I fall into the category as a 'trader', as I work full-time and only made a few trades (4) over the last few months.

I think I might be better off getting an accountant for peace of mind. I hadn't a clue what they would charge and was looking for a very rough estimate, and 250 - 300 plus VAT doesn't look too bad, even if I allow for more than this. If it was a ridiculous figure I would've had to start working on it myself this weekend. I think I'd mess it up to be honest - the exchage rates, the 'first in, first out' rule as I sold partial blocks of stock at different stages.

I edited my original post as I meant to say 31st January as the payment due date.

Thanks again Alan! Much appreciated.

ViDuchie

Sorry to hijack your thread. Similar thing here myself except in trading forex.


Trading anywhere up to 10 trades a day.

Do I just need to pay 25% capital gains on my profits in a given year?


Thanks,

V

AugustusMinimus

ViDuchie wrote: »

Sorry to hijack your thread. Similar thing here myself except in trading forex.


Trading anywhere up to 10 trades a day.

Do I just need to pay 25% capital gains on my profits in a given year?


Thanks,

V

Revenue would almost certainly consider this to be a trade.

Tax would be payable at your marginal rate, either 20% or 41%.

If you already have a salary or other income, say at €35,000, then the all your share dealing profits would be taxed at 41%.

In addition, you'd have PRSI at 4% and Universal Social Charge at 7%.


If Revenue consider this trade, you'd also be required to register for tax as self employed and you'd have to file a tax return each october.

ViDuchie

Wow, it's nearly not worth my while.

I take all the risk then when I am in profit the government earns over 50% of my returns! Do they take 50% of my losses too?

Incredible.

AugustusMinimus

ViDuchie wrote: »

Wow, it's nearly not worth my while.

I take all the risk then when I am in profit the government earns over 50% of my returns! Do they take 50% of my losses too?

Incredible.

Any share losses you'd make would offset against your share profits and any other income you make.

If you do go down the route of filing a CGT return instead of deeming it a trade, the Revenue in future may charge interest and penalties on what they deem to be unpaid tax. That's of course if they deem what you are doing to be a trade.

ViDuchie

Thanks

ViDuchie

Elaborating on this a bit further.

I have one account, forex also, that I deposit into and then I allow it to be 100% managed by a group successful investors. I have no input to any trades on this account. They are all relayed automatically to my account.

I pay a fee for this service based upon performance + a fee monthly based on the equity being managed by the trader/s.

I have full access to my funds as with any broker account and can terminate and withdraw my funds within minutes. i.e. there is no holding time with this account.

Any change in the tax liability here on this?

Cheers,

V

Mr. Incognito

Off the top of my head I believe that professional traders are liable to Income tax rather than CGT.

I'm not an expert in this area and don't have the time atm to look it up.

Go to revenue.ie and have a read of the CGT manual there -might help or someone around here might enlighten us.

I'll look it up when I get a moment but it may be a day or two- kinda busy

Toblerone1978

Some UK commission was set up years ago to come up with rules what consistutes a trade and came up with the "Badges of Trades" for this. There's six of them if you want to goole it and simply read them and see if the apply to you. If all six applies, chances are that you're likely to be to be in a trade; if only the one applies, chances are you are liable to CGT. The Badges of Trades are recognised by the Irish courts.

Ultimately it's a judgement call, hence why a good few of these issues ended up in court, both in Ireland and the UK.

Mr Cawley

Toblerone1978 wrote: »

Some UK commission was set up years ago to come up with rules what consistutes a trade and came up with the "Badges of Trades" for this. There's six of them if you want to goole it and simply read them and see if the apply to you. If all six applies, chances are that you're likely to be to be in a trade; if only the one applies, chances are you are liable to CGT. The Badges of Trades are recognised by the Irish courts.

Ultimately it's a judgement call, hence why a good few of these issues ended up in court, both in Ireland and the UK.

Mine or the revenue's call?

Thanks

Alan Shore

Mr Cawley wrote: »

Mine or the revenue's call?

Thanks

Its a self assessment system so you make the decision and make your return and if the Revenue audit your return they make the decision.

barneystinson

Alan Shore wrote: »

Its a self assessment system so you make the decision and make your return and if the Revenue audit your return they make the decision.

Or just contact Revenue, explain your situation and ask them to confirm what taxhead your liable under... That way you'd know where you stand from the outset.