Roadmap for the SIA - do not discuss other issues
- Thread starter smarts
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What is IUT and how would these affect attracting international investment funds?
Also regarding accumulating ETFs are they not an invention of the irish financial services sector as the US forces ETFs to pay out dividends and the UK does not recognise them but has a deemed dividend every year?
Is this the reason why Ireland has over a trillion of international money invested in these ETFs because ireland allows these accumulating ETFs?
Who knows?
No. Most jurisdictions allow both accumulating and distributing pooled investment funds, and many (including Ireland) allow funds that issue different classes of units, some accumuliating and some distributing.
The US is one of the few exceptions. Strictly speaking they too allow both accumulating and distributing funds, but accumulating funds are tax-disadvantaged, so there aren't many of them around in the US.
But most retail investors prefer distributing funds, because they are mostly tax-resident in countries that will tax them on their share of the income and gains accruing in the fund whether or not it is distributed. They dislike paying tax on income/gains they haven't actually received. So the industry standard, for retail investors, is distributing funds. Investors can choose, if they wish, to have their distributions reinvested in purchasing more units (some of which they may sell when tax time comes around).
Oversimplifying a bit, accumulating pooled funds are mostly invested in by other pooled funds, or at any rate by institutional investors. They're generally not marketed to retail investors, which is why you might have the impression that they're not widely available.
Duke of Marmalade
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That is the way the Swedish ISK works. So it is not badly worded. Maybe look up posts on ISK.
Duke of Marmalade
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That's what worries me. The provider must operate the tax aspect in full, including ensuring the investor doesn't break the rules. The ARF experience is not encouraging. A typical ARF charges 0.75% AMC and typical ARF sizes are about €1m so that is fees of €7.5k p.a. Clearly these SimonSavers are going to be much lower than that and essentially regular savings products. AMC? Policy Fees? Contribution charges? Recall that the Life and Unit Trust versions of the SSIA had the usual level of fees that applied in those industries.
If that is the case why would it be any different for irish investors, in other words irish investors would also preferably invest in distributing ETFs in which they pay tax on every year . Therefore the whole DD8 regime cobbled up here is based on a false assumption , why didn't ireland do the same as everyone else, force accumulating ETFs to pay out dividends every year or tax them on their assumed dividends?
There has to be more to this and i think its got to do with the trillion dollars invested in irish domicied ETFs, we are not been given all the information on this.
Because an Irish investor would have to pay Exit tax on the distributions, then more deemed disposal exit tax ever 8 years and they would also need to factor the distributions onto their calculation of DET. People have been saying DD every 8 years is already too complicated.
This is what would drive the funds out of Ireland.
Duke of Marmalade
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I didn't get that bit myself. Still thinking about it.
Brendan Burgess
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At one of the consultations, the Minister said it would be ready to go on Jan 1
They have briefed the fund managers. They can design the products and the systems assuming certain numbers e.g. the annual maximum and then they can change these between Budget Day and 1 January.
It did have me wondering if all potential investments would have daily NAVs.
Is there any mention of increasing the annual max contribution or is it the case the government can come back and fiddle with the tax rate and thresholds?
A grand a month max contribution won’t be enough to tempt me to go near it. Needs to be 20k a year or no dice. 20k a year in 10 years won’t be worth that, so 12k a year is just laughable.
I hope Simon’s advisors are watching this thread
A grand a month max contribution won’t be enough to tempt me to go near it. Needs to be 20k a year or no dice. 20k a year in 10 years won’t be worth that, so 12k a year is just laughable.
I hope Simon’s advisors are watching this thread
I think you’ll be on the money. Harris has only ever mentioned one number publicly on the annual contribution cap, and it was €20k (he said this was for illustrative purposes only, but still)
For lower-mid income earners. The TFA matters. Id be surprised if this wasn’t €25k-€30k (per Sweden)
For higher income earners who plan to plough in €20k for them and their spouse every year for many years, the TFA actually doesn’t matter much at all. It’s all about the annual cap and critically the flat tax rate. They like simplicity and round numbers here. The Swedish way of determining it is silly, so I would be very surprised if it wasn’t set at 1%.
I would add a personal dimension, my spouse is retired and has a good part of her early retirement lump sum sitting in PTSB earning nothing. She’s waiting on this scheme to make her lump sum make at least above inflation in interest each year as investing in ETFs etc is simply not viable in Ireland.
I don’t know what to say to her, as inflation dwindles her savings.
I don’t know what to say to her, as inflation dwindles her savings.
Can obviously do this from deposits and with CGT-liable investments with a bit of planning, but for ETFs looks unlikely. There's a lot of talk about deemed disposal, which may or may not change, but surely there's no escape from "ordinary disposal", so moving from the current ETF to the SIA ETF will incur 38% on gains.
Is it clear if the yearly limit is use it or lose it or accumulating.
Big difference.
A young persons could have x6 the yearly limit by the time they start work.
It would allow you to take money out for house / kids and then bring it back up the previous limit after as opposed to slowly restarting.
Big difference.
A young persons could have x6 the yearly limit by the time they start work.
It would allow you to take money out for house / kids and then bring it back up the previous limit after as opposed to slowly restarting.
If she's prepared to invest the entire lump sum in one go, an ETF subject to DD/LAET is more manageable.
The next best alternative would be an investment trust. Something like FCIT is about as close as I've come across to a globally diversified index. The usual caveats apply however (active management fees, FX, stamp duty, plus a CG1 for the dividends).