Irish Savers Action Group: Deemed Disposal Position

IrishSaversAG

Hey there,

Irish Savers Action Group (ISAG) has been set up to advocate on behalf of Irish Savers under the following headings: Pensions, Financial Literacy and an Irish Savings and Investment Scheme (similar to the UK ISA/Swedish ISK type of vehicle). Please get in contact to join if your values match our goals. We have so far had productive meetings with Labour and the Green party. We're currently working on emailing every TD in Ireland by an ISAG rep from each constituency.

We have also developed the following position on Deemed Disposal tax:

The combination of index investing, discount brokers and dollar cost averaging mean any individual, with as little as €1, can create a diversified portfolio composed of the worlds largest companies. The current Irish tax system is geared towards investing in large lump sums. Ultimately, it leads to the wealthier in society being more able to invest and grow their wealth. It is inherently elitist in nature.

We believe that the current form of deemed disposal is flawed and can be changed in a manner that would suit both Irish savers and Revenue. We are not aware of any other country that has copied deemed disposal since its introduction. However, it is understandable that Revenue would not be inclined to allow money to grow for decades without being able to get a cut. For this reason, Accumulating ETF funds are not sold in the United States.

We believe that deemed disposal should be removed for all Open Ended Distributing Funds. This would cover ETFs, Index Funds and OEICs (Open Ended Investment Companies). It can be maintained for Accumulating Funds such as Accumulating ETF funds. This change would ensure that both Revenue and Irish savers benefit. Revenue would get to tax the dividend payout each year. Investors would have an easier tax regime to follow.

As a result of the changes above, Open Ended Distributing Funds would not meet the criteria deemed necessary to be subject to Exit Tax. Exit Tax is applied to take into account the gross roll up and compounding effect of automatically reinvesting the dividends. The dividends for these funds would be subject to tax, and as such, this would not apply to them.

As such, Open Ended Distributing Funds would be subject to CGT. They would be treated in the same way as any other asset that, when disposed of, is subject to CGT.

Please let us know what you think and ask any questions you may have about ISAG.

Jimmy_Dee

Hi, I support any changes that make the obscene and punitive taxation system on passive index funds that would normally provide ordinary people in Ireland the opportunity to save at low cost with products provided by reliable asset managers such as Vanguard and Blackrock etc. The monopoly of the local insurance and investment funds is uniquely punitive for Irish investors aided and abetted by a myriad of self interested advisers. Any costs above 0.5% (yuck) are anathema to a retail investor. ISA like products would certainly fit the bill here in gombeenland and why not copy the UK as we happily copy nearly everything else. The current system is a complete nonsense with little or no transparency on alternatives and retail investors forced to seek alternatives such as property in order to protect their meagre wealth. The irony of Ireland as the haven for international investors in ETFs is a joke.

Supercell

Kudo's for your work, I'd also add to the above the simplicity of submitting tax's for share trading in general could use an overhaul.
The rules around holding and disposal of shares for CGT are archaic in my opinion and put a lot of people off submitting tax returns due to complexity.
The fact that PAYE workers need to fill out a form (CG1) by hand, scan it and then upload online or else post it is ridiculous, surely this could be done far more quickly entirely online?
Then there are the rules around holding periods in terms of CGT gains or losses (never mind the tiny CGT limit) that are from an age when people had to call their broker to submit a trade. Nowaday with computers anyone can submit multiple trades daily for next to no cost, the government need to move with the times.

In order to be heard I feel that you do need numbers in the form of an online petition perhaps with clearly stated ideals/suggestions to get politicians attention.

I'd like to join/help out, do you have a website or forum?, a quick google shows that there is a Facebook group but I'm not a Facebook user.

cronos

An increase in the "tiny CGT limit" would be great.

Taylor365

Can i start a Fermanagh Tax Haven?

£12k CGT allowance for all!
£2k dividend allowance too!

Stocks and Shares ISA - 100% TAX FREE!