How do you calculate exit tax?

Hi Guys,

As the subject asks - How does one calculate Exit tax on an investment ( Ark Life ).

I was looking at an old article in the indo about this:

http://www.independent.ie/business/...e-the-exit-tax-on-my-investment-26432788.html

Interestingly it is very hard to find a HOW TO on this subject ..

Anyway that article says:
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"Suppose €100,000 is invested in a bond in January 2001.

Some time later the gross value of the bond is €150,000 and a gross partial encashment of €20,000 is requested by the customer. No previous withdrawals have been made.

The chargeable amount is calculated by taking the encashment value and subtracting the allowable premiums, which in turn is multiplied by the encashment value divided by the policy value. In the case of the €100,000 bond, this is €20,000 -- €100,000 x €20,000/ €150,000. This works out at €20,000 minus €13,333, which equals €6,667.

The exit tax on this is €1,533. So the €20,000 encashment will be €18,467 net of tax."

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Does this type of calculation still apply? And yes I know - exit tax is now ( unfortunately @ 41% as opposed to 23% back then. Those were the days

You should ring Ark Life and ask them what i) the current gross value is ii) the surrender value is iii) are there any exit penalties (I doubt it at this stage). They should be able to give you the exit tax figure over the phone.

Hi GS,

Thanks for reply.

No exit penalties. I did ring them and asked, in fact I also get automated current value and exit penalty value over the phone. However this is if one is cashing in the whole amount.

I asked them what the exit tax would be if one was cashing in only a portion - they said they cannot give that figure, nor could they give the figure on the day pre sending out the cheque. Only exit tax figure you can get is if drawing out the whole lot.

They're just being lazy. If I ring a life office and ask them what the exit tax would be on a partial encashment of (say) €15,000 of a €100,000 investment that has grown to €130,000 (after X number of years), they wont have the figure on the system but they'll have it for me in under 24 hours.

This may help (July 2014)

Thanks GS,

I think this calculation is what was used in my OP:

[Premiums Paid x (Encashment Value/Policy Value)]

That gives me some idea anyway - cheers, appreciate your time