Do you need to sell Permanent TSB shares to realise Capital Loss

Cody OHare · 13-10-2017 9:57am #1

My parent has had a capital gain in 2017. They have a number of PTSB shares whose loss will more than off set the gain. The PTSB shares have reduced a total of 99.5% since purchase. The Government Bail out and subsequent share dilution meant that the shares are virtually worthless. I had understood that in these circumstances it was not necessary to actually sell the shares in order to realise the Capital Loss for Tax Purposes. Is that right? Can anyone point to any tax reference that helps explain that?

Obviously selling the shares would crystalize the loss but current health issues make that more difficult than normal.

Prezatch · 13-10-2017 10:35am

You need to crystallise the loss in order to write gains against it.

Also take into account the annual exemption - no cgt payable on gains up to €1,270. So you may not need the losses to prevent a tax charge? If you do both, the losses must be used first and then the exemption.

Cody OHare · 13-10-2017 11:48am

Prezatch wrote: »

You need to crystallise the loss in order to write gains against it.

Also take into account the annual exemption - no cgt payable on gains up to €1,270. So you may not need the losses to prevent a tax charge? If you do both, the losses must be used first and then the exemption.

Tx for response I understand the annual exemption and understand the provision around crystallising losses but my question is more specific.
In the UK there is a provision called Neglible Value Claims ........ "If you own an asset which has become of negligible value then you may choose to make a negligible value claim so that you’re treated as having disposed of an asset even though you remain the owner"
https://www.gov.uk/government/publications/negligible-value-claims-and-income-tax-losses-on-disposals-of-shares-you-have-subscribed-for-in-qualifying-trading-companies-hs286-self-assessment-he/negligible-value-claims-and-income-tax-losses-on-disposals-of-shares-you-have-subscribed-for-in-qualifying-trading-companies-hs286-self-assessment-he--2
Does anyone know if there is a similar provision in Irish Tax code?

Dardania · 13-10-2017 12:04pm

Interesting concept - sounds like having your (now tiny) cake, and eating it. I'm in a similar situation - the trading costs of disposing of the shares are more than the value of them which is quite frustrating

Francie Barrett · 13-10-2017 12:09pm

A negligible value claim does exist in Irish tax system, but in the case of shares, I believe it would only apply to a company that has delisted and wound up. For example, if you had bought €10k of Anglo shares, since they are now kaput and cannot actually be sold to recognise a tax loss, then you could treat that as a negligible value claim. PSTB would be different because these shares do retain some value, so I think you would need to sell them to trigger the capital gains loss.

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-01-09.pdf

Cody OHare · 13-10-2017 12:15pm

Dardania wrote: »

Interesting concept - sounds like having your (now tiny) cake, and eating it.

I'm not sure I see it like that. Nor do I think it is written in a manner that has any great opportunity. I couldn't care less about the shares, by the time they are sold they are worthless.
I may be answering my own questions with links below. I'll need to get advice but I think I'm ok to do as I was thinking. The Charteredaccountants is from 2003 but the Revenue link is Dec 2016
https://www.charteredaccountants.ie/taxsource/1997/en/act/pub/0039/tb/sec0538-1-tb.html
https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-01-09.pdf

Cody OHare · 13-10-2017 12:33pm

Francie Barrett wrote: »

A negligible value claim does exist in Irish tax system, but in the case of shares, I believe it would only apply to a company that has delisted and wound up. For example, if you had bought €10k of Anglo shares, since they are now kaput and cannot actually be sold to recognise a tax loss, then you could treat that as a negligible value claim. PSTB would be different because these shares do retain some value, so I think you would need to sell them to trigger the capital gains loss.

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-01-09.pdf

Perhaps you are right. The more I read the more I see
" Revenue does not accept that the legislation is intended to be applicable in these circumstances particularly where there would be a ready mechanism available to the shareholder to dispose of the shares."

Cody OHare · 13-10-2017 12:34pm

Francie Barrett wrote: »

A negligible value claim does exist in Irish tax system, but in the case of shares, I believe it would only apply to a company that has delisted and wound up. For example, if you had bought €10k of Anglo shares, since they are now kaput and cannot actually be sold to recognise a tax loss, then you could treat that as a negligible value claim. PSTB would be different because these shares do retain some value, so I think you would need to sell them to trigger the capital gains loss.

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-01-09.pdf

Perhaps you are right. The more I read the more I see
"  Revenue does not accept that the legislation is intended to be applicable in these circumstances particularly where there would be a ready mechanism available to the shareholder to dispose of the shares."

Do you need to sell Permanent TSB shares to realise Capital Loss

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