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How is tax calculated for CGT?

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  • 10-11-2020 7:29pm
    #1
    arleitiss
    Registered Users Posts: 3,515 ✭✭✭


    Hi,

    So long story short - I sometimes sell some shares on Degiro and rebuy different ones.

    How does that work with tax?

    Let's say I bought 4 shares for €250 each (€1000 Total)

    Let's say 8 months later they are worth €500 Each (€2000 Total)

    I decide to sell one share and re-invest that into some different share without withdrawing.


    What counts towards CGT?

    1) Is it when I withdraw?
    2) Is it the difference between purchase price and sell price? (So €250 is the difference)
    3) Is it whole €500 that counts towards CGT and later needs to be declared that half of it was investment?


    My problem is tracking the €1270 exemption on CGT and going way over it and committing some sort of tax fraud because I am an idiot and ending up in court.


Comments

  • Options
    #2
    jive
    Registered Users Posts: 5,762 ✭✭✭jive


    arleitiss wrote: »
    Hi,

    So long story short - I sometimes sell some shares on Degiro and rebuy different ones.

    How does that work with tax?

    Let's say I bought 4 shares for €250 each (€1000 Total)

    Let's say 8 months later they are worth €500 Each (€2000 Total)

    I decide to sell one share and re-invest that into some different share without withdrawing.


    What counts towards CGT?

    1) Is it when I withdraw?
    2) Is it the difference between purchase price and sell price? (So €250 is the difference)
    3) Is it whole €500 that counts towards CGT and later needs to be declared that half of it was investment?


    My problem is tracking the €1270 exemption on CGT and going way over it and committing some sort of tax fraud because I am an idiot and ending up in court.

    33% of gain is taxed

    In your example you invested €1k and came out with €2k, therefore a €1k gain. 33% of 1k is €330. This should be declared but will be exempt from tax with the €1270 exemption.

    If you sold one share it’s 33% of the €250 gain (I’m not that good at math to do it in my head!) which again would not breach the exemption threshold and you wouldn’t be taxed assuming you haven’t already used the full tax credit of €1270.


  • Options
    #3
    garrettod
    Registered Users Posts: 2,420 ✭✭✭garrettod


    Hi,

    Can't you also apply transaction charges, for both buying and selling, when working out the net taxable gain?

    Also, if there's an annual free for having the stockbroking account (not sure about DeGiro, but know some of the others charge), does this get offst against the capital gain, or against dividends received, for tax calculations?

    Thanks,

    G.



  • Options
    #4
    Geuze
    Registered Users Posts: 13,066 ✭✭✭✭Geuze


    Yes, fees can be deducted when calculating the gain.

    The holding fee - I'm not sure about.

    It can't be deducted against income tax.

    I'd say it can be deducted against CGT, but not sure.


  • Options
    #5
    Geuze
    Registered Users Posts: 13,066 ✭✭✭✭Geuze


    arleitiss wrote: »
    What counts towards CGT?

    1) Is it when I withdraw?
    2) Is it the difference between purchase price and sell price? (So €250 is the difference)
    3) Is it whole €500 that counts towards CGT and later needs to be declared that half of it was investment?


    My problem is tracking the €1270 exemption on CGT and going way over it and committing some sort of tax fraud because I am an idiot and ending up in court.

    It is when you sell the asset.

    What you do with the proceeds is not relevant.

    2) = yes
    3) = no


  • Options
    #6
    OnDeBanks
    Registered Users Posts: 38 ✭OnDeBanks


    You also pay tax on a first in first out basis. E.g. You buy 100 shares in Company A for €1 each and then 100 more, some time later, for €2 each.
    If you sell 100 of them for €3 your capital gain would be €200. (100 x €3)-(100 x €1)
    If you sell 150 of them for €3 your capital gain would be €250. (150 x €3)-(100 x €1)-(50 x €2)


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  • Options
    #7
    arleitiss
    Registered Users Posts: 3,515 ✭✭✭arleitiss


    jive wrote: »
    33% of gain is taxed

    In your example you invested €1k and came out with €2k, therefore a €1k gain. 33% of 1k is €330. This should be declared but will be exempt from tax with the €1270 exemption.

    If you sold one share it’s 33% of the €250 gain (I’m not that good at math to do it in my head!) which again would not breach the exemption threshold and you wouldn’t be taxed assuming you haven’t already used the full tax credit of €1270.

    Thanks that makes sense.
    I guess my second question is - Do I need to declare it if it still falls under CGT?

    So I've done a lot of selling in past 4 months on Degiro (Some with negative but mostly positive gains) - I could (and probably will go through records for my own benefit) - Do I still need to declare it to revenue as CGT even if I stayed under 1300 Profit?

    That's the part that sort of confuses me, I don't mind paying tax and all that, I just don't want to get a summons to court for tax avoidance due to my idiocy.


  • Options
    #8
    Geuze
    Registered Users Posts: 13,066 ✭✭✭✭Geuze


    arleitiss wrote: »
    Thanks that makes sense.
    I guess my second question is - Do I need to declare it if it still falls under CGT?

    So I've done a lot of selling in past 4 months on Degiro (Some with negative but mostly positive gains) - I could (and probably will go through records for my own benefit) - Do I still need to declare it to revenue as CGT even if I stayed under 1300 Profit?

    That's the part that sort of confuses me, I don't mind paying tax and all that, I just don't want to get a summons to court for tax avoidance due to my idiocy.

    https://revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/when-and-how-do-you-pay-and-file-cgt.aspx

    When to file your CGT return
    You must file by 31 October in the year after the date of disposal. You must do this even if no tax is due because of reliefs or allowable losses.


  • Options
    #9
    namloc1980
    Registered Users Posts: 18,064 ✭✭✭✭namloc1980


    arleitiss wrote: »
    Thanks that makes sense.
    I guess my second question is - Do I need to declare it if it still falls under CGT?

    So I've done a lot of selling in past 4 months on Degiro (Some with negative but mostly positive gains) - I could (and probably will go through records for my own benefit) - Do I still need to declare it to revenue as CGT even if I stayed under 1300 Profit?

    That's the part that sort of confuses me, I don't mind paying tax and all that, I just don't want to get a summons to court for tax avoidance due to my idiocy.

    You must make a CGT return even if you're gain over the whole year is under the €1,270 allowance.


  • Options
    #10
    sternn
    Registered Users Posts: 929 ✭✭✭sternn


    namloc1980 wrote: »
    You must make a CGT return even if you're gain over the whole year is under the €1,270 allowance.

    Do you know if you can do this return through MyAccount or is there a paper form? I've read about form 11 but a little confused by it all!


  • Options
    #11
    namloc1980
    Registered Users Posts: 18,064 ✭✭✭✭namloc1980


    sternn wrote: »
    Do you know if you can do this return through MyAccount or is there a paper form? I've read about form 11 but a little confused by it all!

    https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/when-and-how-do-you-pay-and-file-cgt.aspx


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    #12
    Supercell
    Registered Users Posts: 15,322 ✭✭✭✭Supercell


    sternn wrote: »
    Do you know if you can do this return through MyAccount or is there a paper form? I've read about form 11 but a little confused by it all!

    If you are a PAYE worker fill out - https://www.revenue.ie/en/gains-gifts-and-inheritance/documents/formcg1.pdf , scan it to pdf and upload it to "myEnquiries" in "myAccount" on the revenue.ie website under the subheadings - "Capital Gains Tax (CGT)" - "Capital Gains Tax - Return" within that.

    If you have your own business /not a PAYE worker you need to do it on the ros.ie website online (form 11 IIRC) which you probably are already signed up to in that case.
    https://www.loughlinstown.ie

    Have a weather station?, why not join the Ireland Weather Network - http://irelandweather.eu/



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    #13
    Timmaay
    Registered Users Posts: 11,394 ✭✭✭✭Timmaay


    Degiro produces a tax report for you, does anyone know if Trading212 does similar, or do you have to manually work it out yourself?


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    #14
    Supercell
    Registered Users Posts: 15,322 ✭✭✭✭Supercell


    Timmaay wrote: »
    Degiro produces a tax report for you, does anyone know if Trading212 does similar, or do you have to manually work it out yourself?

    Degiro produces a list of transactions, its far from something you can submit for CGT purposes though its useful to calculate what to submit.

    Trading212 will send you a tax report (similar to Degiro's one) on request via email to their helpdesk.
    https://www.loughlinstown.ie

    Have a weather station?, why not join the Ireland Weather Network - http://irelandweather.eu/



  • Options
    #15
    Timmaay
    Registered Users Posts: 11,394 ✭✭✭✭Timmaay


    Is this report not suitable so? Under the activity tab, and scroll across to reports


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    #16
    Supercell
    Registered Users Posts: 15,322 ✭✭✭✭Supercell


    Timmaay wrote: »
    Is this report not suitable so? Under the activity tab, and scroll across to reports

    Its useful if the numbers you submit are questioned by the revenue I suppose but it doesnt give you things like "aggregate consideration" which the CG1 form asks for when you are submitting your returns.
    https://www.loughlinstown.ie

    Have a weather station?, why not join the Ireland Weather Network - http://irelandweather.eu/



  • Options
    #17
    Browney7
    Registered Users Posts: 3,098 ✭✭✭Browney7


    Timmaay wrote: »
    Degiro produces a tax report for you, does anyone know if Trading212 does similar, or do you have to manually work it out yourself?

    Yeah you need to be careful with Degiro - the apple stock split will show up on my degiro account as me realising a gain even though I didn't sell anything so I dont intend on submitting this as a realised gain. Not sure if anyone else has thoughts on this


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