ETFs taxation issue

Ok. Let me try and clarify what i've said/ seen /submitted on this as i'm conscious i'm getting some terminology mixed up which might be confusing people on this thread....me included.

So in 2016, based off some information from another thread on askaboutmoney.com and a revenue guidance note from 2015, I emailed a spreadsheet of transactions for which there was a gain to the named individual at revenue. I provided ISINs for the transactions (Rabo funds -not etfs, UCITs/IE domiciled funds). I received the following response


The taxation regime for unit holders in Irish domiciled funds (including ETFs) is provided for in sections 739B- 739H of the Taxes Consolidation Act (TCA) 1997. There is no annual tax on income and gains arising to an investment undertaking. The unit holder funds roll up tax free within the investment undertaking and the investment undertaking must deduct exit tax from payments made to certain unit holders on the happening of a chargeable event – e.g. annual payment from, or disposal of units in, the investment undertaking. The exit tax deducted by the investment undertaking is a final liability to Irish tax for individual unit holders – i.e. payment from the investment undertaking do not form part of a unit holder’s income for the purposes of the Income Tax Acts nor do not give rise to a chargeable gain for the purposes of the Capital Gains Tax Acts. However, as ETFs cannot deduct exit tax at source, the unit holder must declare same under self-assessment and file a Form 11.


You should completed Panel E of Form 11 in relation to the disposals in your spreadsheet. As per the ETF guidance note, such gains do not attract PRSI or USC.


I hope the above helps clarify the issue.

So I did. Rightly or wrongly, I put in the gain under line 317 (a) "Income from all other Foreign Non-Deposit Interest, Royalties, Annuities, dividends, etc. on which no foreign tax deducted". Again I also attached the spreadsheet detailing transactions & ISINs.

That was the place that I thought best suited the return (as no specifics were given by Revenue). I didnt use 321/322/323 as this was named "Foreign Life Policies/Offshore Funds/Other Offshore Products" and I didn't feel it was the right place to put it.

Also gave them a cheque for the tax amount. This was cashed and initially put against the CGT amount due...and i was told 0 outstanding. Later this cheque was then applied vs Income tax and I was told a CGT amount was outstanding


so at this point I rang revenue, got somebody who advised things were applied wrong in their system and said submit a mail via myRevenue to advise that Revenue should apply the cheque again vs CGT. At this point it got messy and the response from the myRevenue mail was that it was to be treated like equity gains and at 33%. When I queried that and provided above email response re Irish domiciled funds that i was then requested to complete a full Form 11.

Now I think re-reading the ETF guidance note &

Sarenco said:
The funds distributed by Rabo were not ETFs.

In any event, your gains are taxable at 41% and should be reported on Form 11 (line 322(c)).
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I should have advised using this line and not 317.


I've attached the guidance notes for other people.


But i do think that most of the people I've dealt with in revenue did not have a clue on this and while trying to help, probably should not have made any comment or should know where to direct the query.


So long story short -partly my fault for not knowing exactly what to submit (but I couldn't find clear guidance on how to report the income -and their contact only said use schedule E) and partly revenue for not really knowing what to advise/incorrectly advising.


So I'm going to resubmit a Form 11 schedule E using line 322(c) and hope to God this is all resolved.
 

Attachments

  • exchange-traded-funds-guidance-note.pdf
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Gordon Gekko said:
That would be my experience based on 20 years of experience.
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While we're at it, since a majority of Revenue audits (80% of which are conducted incompetently if your assertion is correct) result in additional liabilities due from taxpayers, what do you think that says about competence across the accounting/tax profession? o_O
 
torblednam said:
While we're at it, since a majority of Revenue audits (80% of which are conducted incompetently if your assertion is correct) result in additional liabilities due from taxpayers, what do you think that says about competence across the accounting/tax profession? o_O
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We’ll leave it there, thanks, on the basis that:

- You think that a statistic relating to all Revenue staff would also apply to Revenue auditors.

- You think that the majority of additional liabilities uncovered during Revenue audits are the fault of tax advisors/accountants.

(Both ludicrous views)
 
Gordon Gekko said:
We’ll leave it there, thanks, on the basis that:

- You think that a statistic relating to all Revenue staff would also apply to Revenue auditors.

- You think that the majority of additional liabilities uncovered during Revenue audits are the fault of tax advisors/accountants.

(Both ludicrous views)
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If they're ludicrous views maybe I've oversimplified your opinion, which I'm sure is very well thought out and has a sound rationale behind it that you can share with us.

So the concentration of incompetence varies across Revenue?

I'm only asking you to stand over your assertion that 80% of their staff are incompetent.

Would you like to break it down across the various areas then, the main customer/agent focused ones being customer service, audit/compliance and CG's.

What proportion of each of those would you say is incompetent, in your experience?

And how do you extrapolate from there to Revenue as a whole, given that the areas you interact with constitute only a proportion of the organisation as a whole?
 
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No I would not. I have no interest in playing whatever game you want to play. In my experience, a minority of Revenue staff are competent or highly competent. I’ll leave it at that. You are free to disagree.

As a sorbet to cleanse your palate, I will leave you with a statistic. Revenue employ just under 6,000 people. Last year, 12 of them completed the Chartered Tax Adviser qualification.
 
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Anyhoo...

I hope it's uncontroversial to say that the administration of our investment fund tax regime is not exactly user-friendly and that the OP's experience with Revenue thus far has been far from ideal (to put it mildly).

I think that's a shame.:(
 
Sarenco said:
Anyhoo...

I hope it's uncontroversial to say that the administration of our investment fund tax regime is not exactly user-friendly and that the OP's experience with Revenue thus far has been far from ideal (to put it mildly).

I think that's a shame.:(
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Agreed on the non user friendly regime. Can't really give out about Revenue as I may have contributed to the confusion with original return....but i do think they should have a little better idea of what to do. The ETF/UCITS guidance doc should really state where each type of fund is to be advised (eg which form/line).


So just for everybody reading this or having similar issues, I got a response from the original person in revenue. This person apologized for omitting information on the original email which may have caused me some confusion. I was told categorically that I should submit the return completing Panels A,D & E and submit my gain under 322 (c). (Plus any other relevant panels for my circumstances outside this issue).
 
Gordon Gekko said:
As a sorbet to cleanse your palate, I will leave you with a statistic. Revenue employ just under 6,000 people. Last year, 12 of them completed the Chartered Tax Adviser qualification.
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Bit of an irrelevant statistic in isolation. Revenue currently recruit in the hundreds of new staff across various grades each year, to replace the large numbers retiring. The majority of whom (with the possible exception of the clerical officer grade where the pay starts at about 20k) have either a tax or accounting qualification.

Revenue also run their own academically accredited technical training for their staff, up to Honours degree level. All of which I suspect you know, if you sourced your statistic where I think you did... (
https://www.revenue.ie/en/corporate/information-about-revenue/governance/annual-report.aspx)
;) but you cherry pick if you feel you must :)

As I think about it, I'd say at this stage Revenue must employ more qualified accountants and CTA's than any other employer in the country, private or public sector, certainly not far off it.
 
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Hi,

Sorry to add always the same question here but I would like to see if everybody is filing the form in the same way.

The gain from an Irish ETF should be posted in the form 11 (2017) under the part E 322 (offshore funds) or under F 409 (Investment undertakings)?

And, Do you know if we should also pay the preliminary tax for the 2017?

thank you!!
 
You can use panel E322 for gains arising on the (actual) disposal of an interest in an Irish domiciled ETF and F409 for gains arising on a deemed disposal (under the 8 year rule).

Apparently Revenue considers any exit tax paid to be relevant for preliminary tax purposes.
 
Sarenco said:
You can use panel E322 for gains arising on the (actual) disposal of an interest in an Irish domiciled ETF and F409 for gains arising on a deemed disposal (under the 8 year rule).
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Why would one do that?!

Onshore funds have no place in the offshore funds section of the tax return.
 
Gordon Gekko said:
Why would one do that?!
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Because gains arising on the disposal of shares in an Irish domiciled ETF are obviously not deducted at source.

My understanding is that Revenue has previously advised that E322 was the appropriate place to make that return on Form 11, as though the Irish domiciled ETF was an offshore fund.

Are you suggesting that is no longer the case?
 
Interesting; I was advised to include it in 409 as a deemed disposal.

Neither is optimal...more nonsense in relation to fund investments. All of which is a barrier to people investing and providing for themselves.
 
So. I think we can say that is better using the 322 E fir irish and eu etf. This is what Davy group is suggesting.

Thanks to all the posts on this... the etf tax treatment is really a mess...
 
Last question. Hope will be more clear than the previous.

I check with revenues regarding the preliminary tax (deadline with Ros 16 Nov.) And they told me that I have to pay

90% of the final liability of the tax year (And they confirm me 3 times is the year 2016)

100% for the 2015

105% for the 2014 if this is not nil.

Are the years correct? I thought the 90% was on the tax for this year (2017!)

Thanks
 
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