Indexation Multiplier for CGT

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roxymusic

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To work out the multiplier am I correct in stating that the Expenditure of (in this case shares) is deducted from the benefit accrued by the Disposal and the difference is then multiplied by the appropriate indices to arrive at the amount to be paid in tax. For example if shares are bought in 1998 & sold in 2004 the (From Revenue tables) the correct indices is reached by matching the two years. Hope this makes sense as a question?!!


Please comment


Roxymusic
 
No! The acquisition price is multiplied by the indexation multiplier and then the result is deducted from the selling price to get the assessable gain. You then deduct other allowances and expenses. The whole point of indexation is to adjust the acquisition price to take account of inflation over the period of ownership.
 
ClubMan said:
No! The acquisition price is multiplied by the indexation multiplier and then the result is deducted from the selling price to get the assessable gain. You then deduct other allowances and expenses. The whole point of indexation is to adjust the acquisition price to take account of inflation over the period of ownership.
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Thanks Clubman. That would appear to lower my CGT quite a bit. Taking that the index multiplier for shares bought in 1998/99 & sold in 2006 is 1.212. (I hope this is right!). I understand there is no indexation after 2002 but the savings as a result of using the multiplier is considerable. An example of my calculations would show that for shares bought for say €10,000 in 1998 & sold in 2006 for 15,000 that the adjusted gain is 2880 rather than 5000. Does this sound ok to you?


Thanks

RoxyM
 
roxymusic said:
Taking that the index multiplier for shares bought in 1998/99 & sold in 2006 is 1.212. (I hope this is right!). I understand there is no indexation after 2002 but the savings as a result of using the multiplier is considerable. An example of my calculations would show that for shares bought for say €10,000 in 1998 & sold in 2006 for 15,000 that the adjusted gain is 2880 rather than 5000. Does this sound ok to you?
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Yes this is correct. Don't forget to deduct your annual exemption (€1,270) from your indexed gain. The amount of CGT to be paid in this case is (€2,880 - €1,270) x 20% = €322
 
Thanks for that Tenacious. The amount of CGT seems small but I 'm not complaining!

Can you just confirm that I'm using the correct index Multiplier @ 1.212 before I send the cheque.

Do you know from yours or from others' experience whether REvenue expect a detailed breakdown or just the amount of CGT & a payslip. I do understand that a return is due next year.

Roxymusic
 
Yes, you are using the correct indexation factor. No you do not need to give Revenue a detailed breakdown when making the CGT payment. You will however be required to give details when you file you CGT Return in October 2007.
 
Thanks for all the advice to date!

I am looking at the Revenue's Computation sheet for Disposal of Assets other than Devl. Land (from the Revenue Guide to CGT).

I am trying to determine whether the costs associated with selling shares (in my case) eg stockbrokers costs, expenses associated with lost share certs etc can be considered 'Incidental costs of disposal' and therefore be deducted from any CGT due.

Under the heading Computation, item 5 reads: Less Incidental Costs of Disposal (if any). On Renenues Guidence notes on completion of Computation sheets Incidental Costs of disposal is ' This is expenditure wholly & exclusively incurred by you for the purposes of the disposal e.g. cost of valuing, advertising & legal expenses (& I presume stockbrokers costs).

In addition if the acquisition of shares also incurred charges (& in my case solicitors fees as the shares were willed) can these costs also be deducted from a gain. The Guidence notes state that 'Incidental costs of acquisition such as legal fees, stamp duty are allowable as part of the cost'.

Thanks

Roxymusic
 
Have the Revenue posted what the Indexation multipliers in 2006 are yet? I have CGT to pay on share disposals from Jan'06 to 30 Sept'06 but I cannot seem to find the Indexation multipliers for 2006 yet on the Revenue website. I can only find the 2005 multipliers.
 
The 2006 multiplier is the same as the 2005 multiplier. Indexation stopped after 2003 (?) so the multipliers for years after that are fixed.
 
If Indexation has stopped after 2003, what has replaced it? Surely, there must be some multiplier that caters for infaltion etc?
 
I don't think that these happened at the same time. As far as I know CGT was already 20% for several years before indexation relief was stopped for subsequent years. I don't think that the two changes were related.
 
ClubMan said:
I don't think that these happened at the same time. As far as I know CGT was already 20% for several years before indexation relief was stopped for subsequent years. I don't think that the two changes were related.
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Indeed. CGT reduced to 20% in 1998. Indexation abolition announced in 2002.
 
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