Investments and onerous taxation

settlement

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Hi all,

In terms of equities, what is the 'simplest' kind of investment that prevents the baggage of complying with onerous taxation rules annually etc?

I assume buying rarely and in large amounts minimises number of transactions and helps simplify matters? This isn't feasible for all of us but what are some other techniques or even just investments that simplify taxation
 

jpd

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Invest in an life insurance mutual fund - then you will no onerous or otherwise taxation rules to comply with as the investment company will handle that aspect of the investment

However, and it's a big HOWEVER, they will pay your Exit tax of 41% on all gains and receive annual management charges in payment for this service
 

RedOnion

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I assume buying rarely and in large amounts minimises number of transactions and helps simplify matters?
If you're buying equities, the frequency of buying doesn't matter much. Its the dividend that creates an annual return, and then the selling that triggers CGT.
 

SBarrett

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JPD is right. Invest through an insurance company. They will manage all taxation for you. But the tax is 41% on growth and you pay 1% tax on the way in. You can switch funds at any time without triggering a tax liability.

If you are looking to do it yourself, buy stock that doesn't pay a dividend e.g. Berkshire Hathaway, Ryanair, most tech stocks. You can hold them for decades without having to do anything. Pay CGT at the end at 33%.


Steven
www.bluewaterfp.ie
 

settlement

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If you're buying equities, the frequency of buying doesn't matter much. Its the dividend that creates an annual return, and then the selling that triggers CGT.
I thought individual purchases would have to be declared? For tax reasons
 

settlement

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JPD is right. Invest through an insurance company. They will manage all taxation for you. But the tax is 41% on growth and you pay 1% tax on the way in. You can switch funds at any time without triggering a tax liability.

If you are looking to do it yourself, buy stock that doesn't pay a dividend e.g. Berkshire Hathaway, Ryanair, most tech stocks. You can hold them for decades without having to do anything. Pay CGT at the end at 33%.


Steven
www.bluewaterfp.ie
Thanks jpd and Sbarrett.

So that I understand correctly: I can do the same broad index investing but under the umbrella of an insurance company? It looks like the cost is quite expensive although having said that, most ETFs seem to be subject to 41% exit tax in Ireland regardless, so maybe it isn't that bad.

I'm not going to buy individual stocks at present. I'm more of a passive, track-the-market investor.
 

RedOnion

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I thought individual purchases would have to be declared? For tax reasons
No. Stamp duty is charged automatically on purchase. That's the only purchase tax.
Revenue only care about income or gains, so it's only when you sell that you report. You need to keep a record of the purchases yourself so you have the base cost for capital gains tax when you sell.
And your dividends need to be reported annually, but it's easy to keep a track and then just submit the total amount. Or, as suggested above, but stocks that do not pay a dividend.
 

lledlledlled

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Hi all,

In terms of equities, what is the 'simplest' kind of investment that prevents the baggage of complying with onerous taxation rules annually etc?


I assume buying rarely and in large amounts minimises number of transactions and helps simplify matters? This isn't feasible for all of us but what are some other techniques or even just investments that simplify taxation
You can invest in equities through your pension, and not have to worry about annual returns.
 

jpd

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… Revenue only care about income or gains, so it's only when you sell that you report. ...
You have to report the total of assets acquired ie purchased on the tax return each year - so total value of shares purchased
 
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gravitygirl

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Am I right in thinking that with life assurance company products e.g. zurich funds, if you have a fund split across say 4 or 5 funds, the tax is payable on gains made overall (i.e. the combined 4-5 funds taken as a single fund if you will) so if 3 funds were down and two funds were up slightly but overall you had not made gains no tax would be payable?
 

RedOnion

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@jpd
You're correct, and thanks for pointing out my mistake. I made an assumption, which is worse!

Feel free to correct the following where I'm off the mark:

If you only have to submit a Form 12 return, there is no requirement to report asset purchases.
But if you submit a Form 11 they must be included.
But even then, all that's required is a total for the year. So nothing onerous (in the context of a Form 11 return).
 

Gordon Gekko

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The requirement to disclose purchases is soft to say the least. In reality it’s more a case of it being handy for one’s own record keeping rather than Revenue waving a big stick.
 

joe sod

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So that I understand correctly: I can do the same broad index investing but under the umbrella of an insurance company? It looks like the cost is quite expensive although having said that, most ETFs seem to be subject to 41% exit tax in Ireland regardless
This seems to crop up again and again ,the frustration of irish investors not being able to invest in a broad based etf or fund without being subject to onerous taxation requirements. Im amazed the irish financial industry hasn't come up with an investment trust specifically for irish investors maybe containing stocks or vanguard etfs and paying low or no dividends. I have been investing in UK investment trusts precisely for this reason (its generally agreed that uk investment trusts are treated like stocks as they trade on the stock market themselves). Which begs the question why dont the irish financial services industry establish their own investment trusts?
 

SBarrett

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Thanks jpd and Sbarrett.

So that I understand correctly: I can do the same broad index investing but under the umbrella of an insurance company? It looks like the cost is quite expensive although having said that, most ETFs seem to be subject to 41% exit tax in Ireland regardless, so maybe it isn't that bad.

I'm not going to buy individual stocks at present. I'm more of a passive, track-the-market investor.
They are doing ALL the work for you. You can't outsource all the taxation and admin and not expect to pay for it.

In saying that, there are lots of different contracts with different charges based on how much they advisor takes as commission (more commission, higher charges)


Am I right in thinking that with life assurance company products e.g. zurich funds, if you have a fund split across say 4 or 5 funds, the tax is payable on gains made overall (i.e. the combined 4-5 funds taken as a single fund if you will) so if 3 funds were down and two funds were up slightly but overall you had not made gains no tax would be payable?
Yes, it's the total value of your money under the contract.


Steven
www.bluewaterfp.ie
 

SBarrett

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The requirement to disclose purchases is soft to say the least. In reality it’s more a case of it being handy for one’s own record keeping rather than Revenue waving a big stick.
I've been told they want it more as something to check against when you submit your returns. They can see what you've stated you'd invested when you are paying your CGT. With the levels of reporting these days anyway, they already know what you've invested as your stockbroker/ platform has already told them!

Steven
www.bluewaterfp.ie
 

settlement

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I see. Thanks for explanations. I'm not subject to Irish taxation at the moment but trying to optimise things for when I return
 

joe sod

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I've been told they want it more as something to check against when you submit your returns. They can see what you've stated you'd invested when you are paying your CGT.
but it doesn't give them very much information really, just the total value of stocks bought in the tax year even though most of that money could be the proceeds from the sale of other stocks sold in the tax year, therefore you havn't really accumulated any additional assets For example you could have bought 60000 euros worth of shares which you would enter on the return, but that could be the proceeds from the sale of other shares which you sold at a loss, so no CGT. I am puzzled as to why they dont look for more information on this.
 
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