Tax on Co-op shares(READ OP BEFORE POSTING)

Bass Reeves

I was reading todays rag. It was interesting to see all the hubbub about this issue. We should really question why the likes of the IFJ etc who consider that politicians should get involved. Some of there writing on it bordered on hysteria. We have fought long and hard to make Revenue independent of politicians. The reality this is a revenue functions.

The responsibility after that is for those involved to follow the procedures. There is a faculity for those involved to lodge a settlement with revenue and then to appeal the findings. After that there is the option of a test action through the court by Co-op to protect there members. This would possible be winnable as Kerry and Glanbis challanged Board Bia over a 1 puond value attached to there shares nad lost this case. It was interesting to see where some have declared this as a gain and had paid tax as a capital gain. In such a case revenue I imagine would be willing to accept a balancing payment as good faith was shown by respondent.

However those that made no declaration may have a case to answer like I would if I had not declared income or capital gain. It was interesting to see the IFJ whipping up hysteria and comparing it to the Apple case and Michael Noonans statement regarding same.

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Buford T. Justice.

cute geoge

Imo the revenue are chancing their arm on this one ,they see the value of kerry co op shares ,each kerry co op share is worth 6.25 plc shares so today (6.25x66) so potiental bonanza of millons by changing from capital gains tax(33%) to income tax (51%)
Besides all else the time frame for payment is crazy

Bass Reeves

When revenue do a compliance audit( it did it for those that had buildind society shares when Irish Permant was sold on stockmarket) you have 21 day to file a settlement that is the law. TBF the revenue have seem to have set the Co-op share value at what there were trading at on the grey market in those years not the multiple of Kerrygroup share value. There claim was these were a trading income related to the volume of milk supplied. Share's given in lieu of pay are treated the same as income and taxed the same as income so there is precedence. My point is this is a revenue matter not a political matter that some in the FJ suggest. The independence of revenue is important. It is there to insure that all taxpayers are treated equally. It is also important to note that those accessed can appeal directly to revenue and then go through the courts. The Co-op's themselves could fund such a test case.

fepper

It looks like revenue have a good case here as the shares seem to have been heavily subsidised and milk supply and purchase had to be transacted to qualify,unfortunately it was already existing farmer shareholders that did the subsidising here by diluting the value of their existing old shares

Farmer

There are provisions for tax free share options for employees

http://www.citizensinformation.ie/en/money_and_tax/tax/tax_on_savings_and_investments/employee_share_option_schemes.html

..so why not farmers who, at this point, are no more than contracted 'employees' of these co-ops. Any share that is held by an 'employee' or small supplier, rather than a 'fat cat' corporation is to be encouraged IMO

The farming organizations should be lobbying based on the above.link

alps

Farmer wrote: »

There are provisions for tax free share options for employees

http://www.citizensinformation.ie/en/money_and_tax/tax/tax_on_savings_and_investments/employee_share_option_schemes.html

..so why not farmers who, at this point, are no more than contracted 'employees' of these co-ops. Any share that is held by an 'employee' or small supplier, rather than a 'fat cat' corporation is to be encouraged IMO

The farming organizations should be lobbying based on the above.link

Both of these situations are critically different in that these options or profit shares refer to "employees"

Farmers are definitely not employees...

The bonus shares were in the main a distribution of the company's or coops profits in a ratio relevant to in some cases the amount of product sold to the coop and in more cases relative to the amount purchased from the coop.

Did this add to taxable income?

Unless the coops can prove some existing or long standing agreement with revenue on this, I'm afraid farmers have been left in the lurch....

raindodger

fepper wrote: »

It looks like revenue have a good case here as the shares seem to have been heavily subsidised and milk supply and purchase had to be transacted to qualify,unfortunately it was already existing shareholders that did the subsidising here by diluting the value of their existing old shares

as a supplier it was said to us that poor milk price was needed to prop up share price

fepper

They always have some excuse to keep milk price static

Buford T. Justice XIX

alps wrote: »

Both of these situations are critically different in that these options or profit shares refer to "employees"

Farmers are definitely not employees...

The bonus shares were in the main a distribution of the company's or coops profits in a ratio relevant to in some cases the amount of product sold to the coop and in more cases relative to the amount purchased from the coop.

Did this add to taxable income?

Unless the coops can prove some existing or long standing agreement with revenue on this, I'm afraid farmers have been left in the lurch....

In Kerrys case, they weren't. They had no relevance or impact on profit as they were distributed in relation to quantity of milk supplied.

They also didn't change the value of the company as the value of the other shareholders was diluted to create the shares so holders of Kerry shares should be able to claim refunds of tax paid on other income to the level of the loss of value of their shareholdings.

And add interest and penalties on that refund as well!

alps

..

Bass Reeves

Buford T. Justice V wrote: »

In Kerrys case, they weren't. They had no relevance or impact on profit as they were distributed in relation to quantity of milk supplied.

They also didn't change the value of the company as the value of the other shareholders was diluted to create the shares so holders of Kerry shares should be able to claim refunds of tax paid on other income to the level of the loss of value of their shareholdings.

And add interest and penalties on that refund as well!

On the grey market the share increased in value every year. You can only capatialise a loss or profit at sale. The revenue point is shares were linked to amount of milk supplied so they were income. It is immaterial however as some suppliers made a declaration inrevenue eyes these will be treated separtae to those that made no declaration

BannerBarry

Bass Reeves wrote: »

On the grey market the share increased in value every year. You can only capatialise a loss or profit at sale. The revenue point is shares were linked to amount of milk supplied so they were income. It is immaterial however as some suppliers made a declaration inrevenue eyes these will be treated separtae to those that made no declaration

There was a quantifiable loss to the existing Kerry Co Op shareholders.
Each year the value of each existing share fell by around 5% in book terms the day the patronage shares were issued.
This occurs for years and caused a conversion value back in the 1990 s to go from 11 Group shares per co op share to around 6.1 now.
The co op share should be worth €715 or so per share today instead of €400 per share.

This was as a result of the patronage shares being issued.
The reason the Co op shares went up most years related solely to the value of Kerry Group Plc share price going up.

There was a loss to the existing shareholders but I would not know if some shareholders can claim this as a deduction against cgt or Income tax. The loss works out far larger than the income tax now being charged by the revenue I would think

djmc

I am a bit confused by this to say the least
My understanding was that I was given an option to buy co op shares at 1.25 euro a share for every 1000 litres of milk supplied or opted out of share purchase if I wished.
The shares are not traded on the open market and have share value of 1.25 printed on the certificate which is what farmers pay for them.
If they are sold to investors at a higher than original price tax is paid on the difference between purchase and sale price.
So how can you be taxed twice on the same thing and where are they getting there share value price from.
It's like charging someone income tax when they buy an all Ireland match ticket and capital gains tax when they sell at more than market value.

fepper

djmc wrote: »

I am a bit confused by this to say the least
My understanding was that I was given an option to buy co op shares at 1.25 euro a share for every 1000 litres of milk supplied or opted out of share purchase if I wished.
The shares are not traded on the open market and have share value of 1.25 printed on the certificate which is what farmers pay for them.
If they are sold to investors at a higher than original price tax is paid on the difference between purchase and sale price.
So how can you be taxed twice on the same thing and where are they getting there share value price from.
It's like charging someone income tax when they buy an all Ireland match ticket and capital gains tax when they sell at more than market value.

The shares are being traded in a certain market,that's seems how they valued them

BannerBarry

djmc wrote: »

I am a bit confused by this to say the least
My understanding was that I was given an option to buy co op shares at 1.25 euro a share for every 1000 litres of milk supplied or opted out of share purchase if I wished.
The shares are not traded on the open market and have share value of 1.25 printed on the certificate which is what farmers pay for them.
If they are sold to investors at a higher than original price tax is paid on the difference between purchase and sale price.
So how can you be taxed twice on the same thing and where are they getting there share value price from.
It's like charging someone income tax when they buy an all Ireland match ticket and capital gains tax when they sell at more than market value.

As I understand it the Revenue are saying that you purchased a share for €1.25 that was worth €65, 75 and 90 when you received it.
You got a benefit of €77 on average versus what the shares were worth over those years.
If you sold the shares today at €200 (prior to this fiasco) you should pay income tax 1st on the €65 and then cgt on the €200 less the €65 value.

In essence you could pay Income tax of €33 and a further €45 cgt per share on the gain from when you got the shares in 2011.
Crazy stuff... Poor Stan has this dilemma with his 120k group shares!

fepper

Stan would get employees relief on them maybe

BannerBarry

No.. I don't think so. Check Michael O'Leary and his tax bill.
Stan getting full top rate of tax.. whatever that is in USA!

BannerBarry

Kerry co-op Board meeting;

The Kerry Co-op board met today to discuss the implications of this week’s additional tax demands received by 400 of its members.

Afterwards, a letter was hand delivered to the Revenue Commissioner’s in Tralee, listing the concerns of the Kerry Co-op board on this matter.

“This is part of a process,” said a Kerry source.

“The board will await the official response of the Revenue on all of the issues that have been raised, after which decisions will be taken on how best to deal with the matter further.”

fepper

I suppose thats good enough for now but the coop board have to be more transparent with its shareholders on any ongoing issues that affects our shareholdings from now on and their capabilities in a investment company for a coop

BannerBarry

I agree 100%... clarity on such matters is essential going forward... otherwise the Co Op directors are opening themselves up to litigation in a personal capacity.

Bass Reeves

BannerBarry wrote: »

There was a quantifiable loss to the existing Kerry Co Op shareholders.
Each year the value of each existing share fell by around 5% in book terms the day the patronage shares were issued.
This occurs for years and caused a conversion value back in the 1990 s to go from 11 Group shares per co op share to around 6.1 now.
The co op share should be worth €715 or so per share today instead of €400 per share.

This was as a result of the patronage shares being issued.
The reason the Co op shares went up most years related solely to the value of Kerry Group Plc share price going up.

There was a loss to the existing shareholders but I would not know if some shareholders can claim this as a deduction against cgt or Income tax. The loss works out far larger than the income tax now being charged by the revenue I would think

It is not as unless they bought the shares at a higher value than they sell them A gain or loss is not quantifiable until you sell the asset.

I buy a house for 100K, six months later property prices and exact same house next store sells for 90K. I cannot not quantify that loss until I sell and if it went up in value by 50K revenue cannot charge me a gain tax until I realize that profit.

Existing shareholder cannot claim a loss until the realize the value of the asset. The share are still worth more than they originally paid for them. A loss only happens when you sell something for less than you buy it. You cannot claim tax relief anyway on it you offset it against future losses. this has a disadvantage as you must use this loss before you use your annual CGT exemption of 1250 euro.

Bass Reeves

BannerBarry wrote: »

I agree 100%... clarity on such matters is essential going forward... otherwise the Co Op directors are opening themselves up to litigation in a personal capacity.

They would only be open to litigation if they gave wrong tax advice however I expect that in such a case the boards advice would be talk to your accountant and revenue

BannerBarry

Bass Reeves wrote: »

They would only be open to litigation if they gave wrong tax advice however I expect that in such a case the boards advice would be talk to your accountant and revenue

Not what we were talking about.
If the board withheld pertinent information on the shares for example and someone bought them at an artificially inflated price because a Board did not make information available on tax liabilities that were out there, the board of directors are personally liable.
Check out Tesco and their accounting scandal as an example.

kowtow

On further examination I think I was right in my original comparison of these shares with a scrip issue. In many countries that would not be taxable as income but unfortunately in Ireland I think the position is different.

If that is correct... and everyone needs to check the position with their own accountant then the only obvious route to challenge is the nature of the market for the shares. This is difficult on two fronts, first because the kind of legal expertise needed to opine isn't available in this country and more obviously because - I think - in their own advice notes the revenue have explicitly extended treatment of scrip issues to unquoted shares, which are similar in the sense that there is not an open market.

There is a potential solution here in encouraging the coop to buy back the shares in return for a convertible loan note or some other instrument with a more favourable tax treatment but the revenue might well regard that as a device (a scheme without commercial justification ).. and disqualify it in and of itself.

Difficult one.

Buford T. Justice XIX

Kerry Co-ops response to the Revenue tax assessment.

http://www.farmersjournal.ie/kerry-want-to-take-a-tax-test-case-238709

BannerBarry

Buford T. Justice V wrote: »

Kerry Co-ops response to the Revenue tax assessment.

http://www.farmersjournal.ie/kerry-want-to-take-a-tax-test-case-238709

The most significant event in the whole Tax saga is Kerry Group PLC and Kerry Co Op appear to have patched up prior differences over this Revenue assessment..... its like a football team getting into a brawl in a bar and becoming teammates afterwards!

Good to see if it continues.
The new acting Chairman of Kerry Co-Op is believed to be a very likeable guy so that's a great step forward

BannerBarry

Farmer wrote: »

There are provisions for tax free share options for employees

http://www.citizensinformation.ie/en/money_and_tax/tax/tax_on_savings_and_investments/employee_share_option_schemes.html

..so why not farmers who, at this point, are no more than contracted 'employees'

I think the link you have is for Approved Share options schemes. These were only for the likes of Semi State bodies (Eircom) if I remember so the public sector.. multinational employees or Irish PLC emplyees would not get Revenue approved schemes.

I believe the argument is that the 3500 or so suppliers that got the Patronage shares are not employees hence the tax rules are not there currently to tax them to Income tax for those years.
They could at any time change the tax rules going forward for future years.

The biggest fall guys here could be the Kerry Co op Directors.
They would normally be employed by the company. If they are employees of Kerry Co op then the tax rules are likely to be there to tax their Patronage shares as Income tax.

Kerry2016

I just saw this thread and ye are all making some very interesting points…

This is my dilemma, I'd appreciate any feedback

We were original shareholders in the Co Op from day 1, our Co Op shares were at first worth 11 PLC shares… because of the Patron Share Scheme we gained 20% more Co Op shares than we originally had… however because the Co Op shares are now only worth 6.12 PLC's instead of 11 PLC's because of the patron share scheme diluting their value we are clearly at a huge loss…

I'm not expecting tax credits or anything but I just don't want to have to pay this tax bill that the revenue commissioners have sent me, the way how they're telling me that I've made money from the patron share scheme they might as well be pissing down on top of me and tell me it's raining

OverRide

You'd want to do the maths as Kerry plc shares value may have made up and surpassed that loss in the interim

Kerry2016

OverRide wrote: »

You'd want to do the maths as Kerry plc shares value may have made up and surpassed that loss in the interim

I don't think the value of the PLC shares has a whole pile to do with it… the point I'm trying to make to the revenue is that the patron share scheme halved the value of our co op and they've come up with this idea that we should pay tax on it because we allegedly made all this profit… basically what happened was there was a share split, there was twice as many co op shares as there would have been otherwise so they're saying that automatically equates to all this profit

Bass Reeves

Kerry2016 wrote: »

I just saw this thread and ye are all making some very interesting points…

This is my dilemma, I'd appreciate any feedback

We were original shareholders in the Co Op from day 1, our Co Op shares were at first worth 11 PLC shares… because of the Patron Share Scheme we gained 20% more Co Op shares than we originally had… however because the Co Op shares are now only worth 6.12 PLC's instead of 11 PLC's because of the patron share scheme diluting their value we are clearly at a huge loss…

I'm not expecting tax credits or anything but I just don't want to have to pay this tax bill that the revenue commissioners have sent me, the way how they're telling me that I've made money from the patron share scheme they might as well be pissing down on top of me and tell me it's raining

Kerry2016 wrote: »

I don't think the value of the PLC shares has a whole pile to do with it… the point I'm trying to make to the revenue is that the patron share scheme halved the value of our co op and they've come up with this idea that we should pay tax on it because we allegedly made all this profit… basically what happened was there was a share split, there was twice as many co op shares as there would have been otherwise so they're saying that automatically equates to all this profit

Original Co-op share cost £1/share (1,27 euro). Share splits are immaterial etc as shares are worth more than that at present. The present revenue case is only applied to patronage shares. They have decided that these should be treated as income. The have assuned grey market value with an average value over the three years of about 65 euro( but on the tax detail would access each year at its grey market value).

There is two aspects to this case the first is whether the patron share should be treated as income and on the face of it it has to be assumed that revenue has a case. These were alloted according to production amounts at 1/1000 gallons.

The second aspect is at what value the shares should have been accessed at the co-op share denomination of 1.27 euro/share or the grey value. There is acase for the nominal value as a court case forced Kerry Group and Glanbia to accept that Ornua co-op redemption value was only that however on the other handthese shares traded at this value on an open market with Kerry Co-op approving these share sales.

As I have appointed earlier a loss is can only materlize when it is realized so assumed losses cannot be accounted for. Share splitting happens all the time on the stock market it has no impact on profits or losses until it is realized

Kerry2016

Bass Reeves wrote: »

Original Co-op share cost £1/share (1,27 euro). Share splits are immaterial etc as shares are worth more than that at present. The present revenue case is only applied to patronage shares. They have decided that these should be treated as income. The have assuned grey market value with an average value over the three years of about 65 euro( but on the tax detail would access each year at its grey market value).

There is two aspects to this case the first is whether the patron share should be treated as income and on the face of it it has to be assumed that revenue has a case. These were alloted according to production amounts at 1/1000 gallons.

The second aspect is at what value the shares should have been accessed at the co-op share denomination of 1.27 euro/share or the grey value. There is acase for the nominal value as a court case forced Kerry Group and Glanbia to accept that Ornua co-op redemption value was only that however on the other handthese shares traded at this value on an open market with Kerry Co-op approving these share sales.

As I have appointed earlier a loss is can only materlize when it is realized so assumed losses cannot be accounted for. Share splitting happens all the time on the stock market it has no impact on profits or losses until it is realized

Thanks for the reply, I'm not sure if I'm grasping what your saying though… we've ended up losing over 100,000 PLC shares due to the dilution of our Co Op shares… the patron share scheme cost us those 100,000 PLC's… revenue keep saying every case is different, do you think I'll still be made pay the tax?… the patron shares I was getting were my own shares they were handing me out but they were worth way less

Kerry2016

I'm not sure either if people realise that we were getting the shares off the Co Op and the Co Op don't buy any milk off us… so it wasn't to subside the milk price… the reason we were getting 1 co op share per 1000 gallons was just there as a limit to how many shares you could buy

Bass Reeves

Kerry2016 wrote: »

Thanks for the reply, I'm not sure if I'm grasping what your saying though… we've ended up losing over 100,000 PLC shares due to the dilution of our Co Op shares… the patron share scheme cost us those 100,000 PLC's… revenue keep saying every case is different, do you think I'll still be made pay the tax?… the patron shares I was getting were my own shares they were handing me out but they were worth way less

My point about a loss having to be realized is that even though the new patronage shares were issued there was no loss realized by you. In raelity the grey market value of your individual share went up in those three year. Capital tax/losses are only realized when you actually sell the shares. Otherwise Revenue could tax us on unrealized profits on shares or property you own but have not traded in. The counter balance is that unrealized losses are not accountable until they happen In reality your Co-Op shares are worth more on the grey market than what was originally paid for them either as patronage or as original Co-Op shares.

I think revenue point about every case being different is in relation to how individuals treated them fotr tax purposes back when they recieved them. Some accounted for them through the capital gains liability tax system. Farmers that accounted for them as such may well only have to pay a balancing payment (if any if in the court case that they are not treated as income). It look as if a trial case will be used to access how these shares should be treated.

BannerBarry

The bit the revenue are pointing out is that a group of suppliers got new shares for milk supply.
They did not get these proportionately to the existing shareholding hence 65% of shareholders missed out and got their shares diluted down.
If all shareholders got the Patronage shares proportional to their shareholding there would be no tax as there would be no gain. You have more shares today worth less on paper than yesterday.
The issue is the A's got a benefit from the B's and C's. The B's and C's lost out and the A's gained. This benefit now being taxed

Kerry2016

Bass Reeves wrote: »

My point about a loss having to be realized is that even though the new patronage shares were issued there was no loss realized by you. In raelity the grey market value of your individual share went up in those three year. Capital tax/losses are only realized when you actually sell the shares. Otherwise Revenue could tax us on unrealized profits on shares or property you own but have not traded in. The counter balance is that unrealized losses are not accountable until they happen In reality your Co-Op shares are worth more on the grey market than what was originally paid for them either as patronage or as original Co-Op shares.

I think revenue point about every case being different is in relation to how individuals treated them fotr tax purposes back when they recieved them. Some accounted for them through the capital gains liability tax system. Farmers that accounted for them as such may well only have to pay a balancing payment (if any if in the court case that they are not treated as income). It look as if a trial case will be used to access how these shares should be treated.

So what if my own shares went up in value, I bought them fair and square. Are you telling me that by taking 100,000 shares off me I should be liable for this tax just because the share price didn't crash?

Kerry2016

BannerBarry wrote: »

The bit the revenue are pointing out is that a group of suppliers got new shares for milk supply.
They did not get these proportionately to the existing shareholding hence 65% of shareholders missed out and got their shares diluted down.
If all shareholders got the Patronage shares proportional to their shareholding there would be no tax as there would be no gain. You have more shares today worth less on paper than yesterday.
The issue is the A's got a benefit from the B's and C's. The B's and C's lost out and the A's gained. This benefit now being taxed

In my case though Banner we're some of the few A's that actually lost out though and now we're getting taxed on it

fepper

In your case Kerry 16 you did gain extra coop shares and extra plc shares on past conversions ,my old lad lost the right to gain extra coop shares as he didn't supply milk as he retired so his old shares subsidised you to get extra coop shares,so he's the one taking a huge write down on his coop share value

Kerry2016

fepper wrote: »

In your case Kerry 16 you did gain extra coop shares and extra plc shares on past conversions ,my old lad lost the right to gain extra coop shares as he didn't supply milk as he retired so his old shares subsidised you to get extra coop shares,so he's the one taking a huge write down on his coop share value

We'd of had to of been producing 600,000 gallons of milk just to stand still, meaning that only then would the amount of Co Op shares we'd of got had the same see through value in PLC as what we originally had… I know we got some patron shares but we were still losing out huglely

Bass Reeves

Kerry2016 wrote: »

So what if my own shares went up in value, I bought them fair and square. Are you telling me that by taking 100,000 shares off me I should be liable for this tax just because the share price didn't crash?

The point about this is that revenue will not make you account for them in a taxable form until you sell them. They are still worth more than you paid for them and revenue cannot access that untill you sell them . Neither can you access any loss until you sell them it is quid quo pro from a capital gain/loss untill you sell them.

They did not take shares off you, they allotted new shares that diluted the number of Kerry group shares that you could access in the case of any allotment. This is why these share have a grey value that is lower than there actual value kerry group rate value.

The taxation part comes into play beccause they were alotted in a preferencial value. TBH my original post was more to do with the way farming bodies IFA, Kerry Group/Co-Op, ICMSA, IFJ etc considered that this should be translated into a politiocal football rather than a matter for revenue and the interested parties (farmers and Co-op) to deal with. Revenue collection should be independent of government and politics after Revenue policy is adopted by legislation

Kerry2016

Bass Reeves wrote: »

The point about this is that revenue will not make you account for them in a taxable form until you sell them. They are still worth more than you paid for them and revenue cannot access that untill you sell them . Neither can you access any loss until you sell them it is quid quo pro from a capital gain/loss untill you sell them.

They did not take shares off you, they allotted new shares that diluted the number of Kerry group shares that you could access in the case of any allotment. This is why these share have a grey value that is lower than there actual value kerry group rate value.

The taxation part comes into play beccause they were alotted in a preferencial value. TBH my original post was more to do with the way farming bodies IFA, Kerry Group/Co-Op, ICMSA, IFJ etc considered that this should be translated into a politiocal football rather than a matter for revenue and the interested parties (farmers and Co-op) to deal with. Revenue collection should be independent of government and politics after Revenue policy is adopted by legislation

If your going to reply to me about this tax situation in future try make sense because there's a few of us here gathered around my iPhone trying to decipher what your on about and none of us can understand it and trust me we know plenty about shares.

Those Co Op shares that Kerry Co Op dished out to strangers were worth a certain amount of PLC's and tell me this, if those PLC's weren't mine then who was getting the dividend on them?? I was getting the dividend on them, the only reason I was getting that dividend was because they were mine.

And I don't believe one word of it where there's been articles written where people have said that they paid income tax or CGT on the shares when they received them, who were these people's accountant? And why didn't those same accountants tell their other customers to pay this tax

I've been onto the revenue anyway and they agree with me so far and see what I'm on about but it's early days yet and we intend on taking them the whole way to court

To reiterate we founded that company, we got a couple patron shares and got the rest of our co op shares halved in value and now we're being told to pay all this tax

Bass Reeves

Kerry2016 wrote: »

If your going to reply to me about this tax situation in future try make sense because there's a few of us here gathered around my iPhone trying to decipher what your on about and none of us can understand it and trust me we know plenty about shares.

Those Co Op shares that Kerry Co Op dished out to strangers were worth a certain amount of PLC's and tell me this, if those PLC's weren't mine then who was getting the dividend on them?? I was getting the dividend on them, the only reason I was getting that dividend was because they were mine.

And I don't believe one word of it where there's been articles written where people have said that they paid income tax or CGT on the shares when they received them, who were these people's accountant? And why didn't those same accountants tell their other customers to pay this tax

I've been onto the revenue anyway and they agree with me so far and see what I'm on about but it's early days yet and we intend on taking them the whole way to court

To reiterate we founded that company, we got a couple patron shares and got the rest of our co op shares halved in value and now we're being told to pay all this tax

It is really quite simple no matter what company I buy share in whether it is Kerry group, Kerry Co-op Bank of Ireland FDC etc. I cannot account for any profit or loss until I sell those share. This is why at the end of any tax year some investors bed and breakfast some share (sell and rebuy) to use up there capital gains allowance or to realize a loss( or a profit) to offset it against another profit (or a loss). That is all I have being explain to you about profit and loss.

You cannot realize a loss or a profit off a share you have not not sold. It dose not exist for accounting purposes. The undistributed PLC shares are the property of Kerryco-op you are only a shareholder in Kerry Co-Op. It has debts and assets and all this has to be accounted for as well as the Kerry group shares. The dividend from these undistributed shares is not paid to you it is paid to Kerry Co-Op who then pay you a dividend at year end from there profits and while it it be related to the dividend income they get from Kerry Group it is not directly that dividend.

Like I stated this should be an issue betyween revenue and the interested parties not as a political football. It should be appealed to revenue and tested throught the courts ideally as a test case so as solicitors are not the real winners.

If you consider that you have made a loss by the distibrution are you willing to pay the tax any gain that may have been achieved before that 2010-2013 distribution or after it. You have not made a loss or a gain until you sell the shares. The shares are worth more in real terms than you originally. Any loss is a mythical loss from a mythical gain that is not accountable for.

Kerry2016

Bass Reeves wrote: »

It is really quite simple no matter what company I buy share in whether it is Kerry group, Kerry Co-op Bank of Ireland FDC etc. I cannot account for any profit or loss until I sell those share. This is why at the end of any tax year some investors bed and breakfast some share (sell and rebuy) to use up there capital gains allowance or to realize a loss( or a profit) to offset it against another profit (or a loss). That is all I have being explain to you about profit and loss.

You cannot realize a loss or a profit off a share you have not not sold. It dose not exist for accounting purposes. The undistributed PLC shares are the property of Kerryco-op you are only a shareholder in Kerry Co-Op. It has debts and assets and all this has to be accounted for as well as the Kerry group shares. The dividend from these undistributed shares is not paid to you it is paid to Kerry Co-Op who then pay you a dividend at year end from there profits and while it it be related to the dividend income they get from Kerry Group it is not directly that dividend.

Like I stated this should be an issue betyween revenue and the interested parties not as a political football. It should be appealed to revenue and tested throught the courts ideally as a test case so as solicitors are not the real winners.

If you consider that you have made a loss by the distibrution are you willing to pay the tax any gain that may have been achieved before that 2010-2013 distribution or after it. You have not made a loss or a gain until you sell the shares. The shares are worth more in real terms than you originally. Any loss is a mythical loss from a mythical gain that is not accountable for.

You've repeatedly missed the point and I'm not wasting any more of my time explaining it to you

MD1983

Kerry2016 wrote: »

I just saw this thread and ye are all making some very interesting points…

This is my dilemma, I'd appreciate any feedback

We were original shareholders in the Co Op from day 1, our Co Op shares were at first worth 11 PLC shares… because of the Patron Share Scheme we gained 20% more Co Op shares than we originally had… however because the Co Op shares are now only worth 6.12 PLC's instead of 11 PLC's because of the patron share scheme diluting their value we are clearly at a huge loss…

I'm not expecting tax credits or anything but I just don't want to have to pay this tax bill that the revenue commissioners have sent me, the way how they're telling me that I've made money from the patron share scheme they might as well be pissing down on top of me and tell me it's raining

The diminution in the capital value of your original shareholding would not be allowable in this case against what Revenue regard as your income (i.e. the patron shares issued to you). This is regardless of what you consider to be fair and reasonable, tax law simply does not provide for such an offset.

Whether the patronage shares are in fact income is an interesting point and some thoughts are:

1. Whether the shares are issued in consideration of milk supplied or simply because milk was supplied, I understand that there was some pro rata system of allocation
2. What is the position where the farmer trades via a company and shares are issued to him personally. This muddies the waters with Revenue's argument in some cases
3. Taxation of profits often follows accounting treatment when determining the profit taxable (although with certain adjustments), what is the correct accounting treatment and from an accounting perspective are the shares necessarily "income" or could a different treatment be justified
4. What has the treatment been in other industries heretofore - e.g. pharmacies often got shares in United Drug due to purchasing from them
5. What is the case law on the topic (most likely from the UK)
6. What Revenue say is not always right - it is often incorrect but generally they do give some thought to projects such as they have undertaken in this case

Kerry2016

MD1983 wrote: »

The diminution in the capital value of your original shareholding would not be allowable in this case against what Revenue regard as your income (i.e. the patron shares issued to you). This is regardless of what you consider to be fair and reasonable, tax law simply does not provide for such an offset.

Whether the patronage shares are in fact income is an interesting point and some thoughts are:

1. Whether the shares are issued in consideration of milk supplied or simply because milk was supplied, I understand that there was some pro rata system of allocation
2. What is the position where the farmer trades via a company and shares are issued to him personally. This muddies the waters with Revenue's argument in some cases
3. Taxation of profits often follows accounting treatment when determining the profit taxable (although with certain adjustments), what is the correct accounting treatment and from an accounting perspective are the shares necessarily "income" or could a different treatment be justified
4. What has the treatment been in other industries heretofore - e.g. pharmacies often got shares in United Drug due to purchasing from them
5. What is the case law on the topic (most likely from the UK)
6. What Revenue say is not always right - it is often incorrect but generally they do give some thought to projects such as they have undertaken in this case

Thanks for the response… do you think we're as well to pay up? The revenue don't seem to be giving any leeway with this to farmers, people like me are effectively being extorted… it'd cost us so much money to challenge them in court and it would basically cost the revenue nothing if it were to go to court… the solicitors fees would be so expensive anyway it seems to be a lose/lose

Kerry2016

MD1983 wrote: »

The diminution in the capital value of your original shareholding would not be allowable in this case against what Revenue regard as your income (i.e. the patron shares issued to you). This is regardless of what you consider to be fair and reasonable, tax law simply does not provide for such an offset.

Whether the patronage shares are in fact income is an interesting point and some thoughts are:

1. Whether the shares are issued in consideration of milk supplied or simply because milk was supplied, I understand that there was some pro rata system of allocation
2. What is the position where the farmer trades via a company and shares are issued to him personally. This muddies the waters with Revenue's argument in some cases
3. Taxation of profits often follows accounting treatment when determining the profit taxable (although with certain adjustments), what is the correct accounting treatment and from an accounting perspective are the shares necessarily "income" or could a different treatment be justified
4. What has the treatment been in other industries heretofore - e.g. pharmacies often got shares in United Drug due to purchasing from them
5. What is the case law on the topic (most likely from the UK)
6. What Revenue say is not always right - it is often incorrect but generally they do give some thought to projects such as they have undertaken in this case

I forgot to say it to you, I thought where a farmer is selling his milk to Kerry Group via a company he's set up that he'd be obliged to get the shares in the company's name?

MD1983

Kerry2016 wrote: »

Thanks for the response… do you think we're as well to pay up? The revenue don't seem to be giving any leeway with this to farmers, people like me are effectively being extorted… it'd cost us so much money to challenge them in court and it would basically cost the revenue nothing if it were to go to court… the solicitors fees would be so expensive anyway it seems to be a lose/lose

depends on a number of factors TBH such as:

1. the strength of the Revenue case
2. the amount you owe and whether you can pay the tax or or not, a lot of people appeal as they have no way of paying the tax and appealing drags things out. also if the liability is small people will pay and wont want the hassle of an appeal
3. the cost of taking an appeal to the Tax Appeal Commissioners
4. whether you have other tax problems that may be uncovered meaning you might pay to keep them away from you

in fairness i think the co-op should have gotten an opinion from a decent tax firm or SC on the merits of Revenue's position and provided that opinion to farmers to allow them some ability to make educated decisions as a lot of farmers accountants simply wont be able to assist them as they dont have the tax expertise. maybe the co-op are in the process of doing same

anyhow - in summary - you should take advice from your tax advisor on it

Bass Reeves

Kerry2016 wrote: »

Thanks for the response… do you think we're as well to pay up? The revenue don't seem to be giving any leeway with this to farmers, people like me are effectively being extorted… it'd cost us so much money to challenge them in court and it would basically cost the revenue nothing if it were to go to court… the solicitors fees would be so expensive anyway it seems to be a lose/lose

From the FJ today it seems that the revenue may be willing to go down the test case route.

Kerry2016 wrote: »

I forgot to say it to you, I thought where a farmer is selling his milk to Kerry Group via a company he's set up that he'd be obliged to get the shares in the company's name?

The only advantage of this would be that it would be at a lower tax rate (12.5%) if they were within the company if revenue case is upheld then a company would have to make a return as well.

MD1983 wrote: »

depends on a number of factors TBH such as:

1. the strength of the Revenue case
2. the amount you owe and whether you can pay the tax or or not, a lot of people appeal as they have no way of paying the tax and appealing drags things out. also if the liability is small people will pay and wont want the hassle of an appeal
3. the cost of taking an appeal to the Tax Appeal Commissioners
4. whether you have other tax problems that may be uncovered meaning you might pay to keep them away from you

in fairness i think the co-op should have gotten an opinion from a decent tax firm or SC on the merits of Revenue's position and provided that opinion to farmers to allow them some ability to make educated decisions as a lot of farmers accountants simply wont be able to assist them as they dont have the tax expertise. maybe the co-op are in the process of doing same

anyhow - in summary - you should take advice from your tax advisor on it

The Co-op is in contact with revenue regarding a test case. Earlier in the week it seemed that revenue were unwilling to accept such a test case but now consider it a feasible option. This will freeze the total case if it happen until such a case reaches an outcome.

BannerBarry

MD1983 wrote: »

depends on a number of factors TBH such as:

1. the strength of the Revenue case
2. the amount you owe and whether you can pay the tax or or not, a lot of people appeal as they have no way of paying the tax and appealing drags things out. also if the liability is small people will pay and wont want the hassle of an appeal
3. the cost of taking an appeal to the Tax Appeal Commissioners
4. whether you have other tax problems that may be uncovered meaning you might pay to keep them away from you

in fairness i think the co-op should have gotten an opinion from a decent tax firm or SC on the merits of Revenue's position and provided that opinion to farmers to allow them some ability to make educated decisions as a lot of farmers accountants simply wont be able to assist them as they dont have the tax expertise. maybe the co-op are in the process of doing same

anyhow - in summary - you should take advice from your tax advisor on it

MD1983 thank you for some great points above.
How long would a typical Test Case take (years)?
What would the cost of a Test Case be to the individual farmer?
One test case is not allowable per the revenue I believe in this instance

20silkcut

27 years since the collapse of the Berlin Wall and the confirmation of the utter failure of socialism we as a nation become ever more socialist giving well over half our national income to the government with this absolute abomination/Frankenstein of a revenue who hound us mercilessly for money to give to the government who waste our taxes making an utter balls of everything they touch the very same as the soviets and every socialist/Marxist regime in the 20th century. The government has too much power and is too big.

Panch18

20silkcut wrote: »

27 years since the collapse of the Berlin Wall and the confirmation of the utter failure of socialism we as a nation become ever more socialist giving well over half our national income to the government with this absolute abomination/Frankenstein of a revenue who hound us mercilessly for money to give to the government who waste our taxes making an utter balls of everything they touch the very same as the soviets and every socialist/Marxist regime in the 20th century. The government has too much power and is too big.

Post of the year on boards
It's about time that people stand up and actually take action against this socialist policitally cirrect crap that is being desired upon us by the left loving media we have