I believe that came up at some stage before it was officially announced and it was ruled out.
Special Investment Accounts limits announced in Budget
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Duke of Marmalade
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I think that will be up to the provider. An earlier statement said it would be possible to move from one SIA to another by in specie transfer so long as the providers can handle that.
I think the tax differences would make moving a non SIA to an SIA tricky though, unlike moving one SIA to a different SIA provider under the same tax arrangement
Duke of Marmalade
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Raises an interesting question. Would putting your ETF into a SIA wrapper involve a realisation? I presume so.
balders93
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Allowing non IA assets to be ported into an IA would be a CGT/Exit Tax avoidance bonanza, absolutely not happening.
Invest in a wide basket of stocks, port your biggest winners into the IA, avoid CGT on unrealised gains, sell, withdraw.
The only sensible regime is to say people have to crystallise gains outside the IA, pay CGT/Exit Tax on that, deposit cash into the IA then re-buy the same securities if that person wants the same securities inside the IA.
What is the best logic / plan about transferring existing financial assets in to the new scheme?
Imagine the following holdings, all held in an online stockbroker
(1) share A, directly held, trading above purchase price, so with potential CGT liability
(2) share B, with no CGT liability, say a bank share bought in 2010 which is yet to return to the breakeven price
(3) shares in an ETF, which have done well recently, but have not reached 8 years yet for DD
I presume all existing holdings will have to be sold into cash?
And then the cash lodged to the new account, assuming the same broker offers the new accounts, to buy these assets a few days later?
Imagine the following holdings, all held in an online stockbroker
(1) share A, directly held, trading above purchase price, so with potential CGT liability
(2) share B, with no CGT liability, say a bank share bought in 2010 which is yet to return to the breakeven price
(3) shares in an ETF, which have done well recently, but have not reached 8 years yet for DD
I presume all existing holdings will have to be sold into cash?
And then the cash lodged to the new account, assuming the same broker offers the new accounts, to buy these assets a few days later?
Maybe it's like Trump trying to rebrand AI as SI?
This seems confusing to me. How is the average calculated?Well lads I’m very impressed with this explaination of this product
What is Ireland's new Investment Account
Learn how Ireland's proposed Investment Account could work, who may be eligible, how tax may be applied and what details are still to be confirmed.www.ccpc.ie
It’s laid out in clear and simple language. The font is nice. Really easy to read and put together well. Well done the CCPC.
(I found it via google AI because of a testing idea on a different thread)
I don't think there's a simple rule here.
(1) Shares carrying a gain, they could fall after you switch and you wouldn't be able to claim that loss relief
(2) Shares carrying a loss, you can only claim the loss relief if you wait four-weeks before re-buying
(3) ETFs with a gain, you're locking in an exit tax rate that may be reduced in the future, or could fall in value and you wouldn't get a refund
The account is really designed for "new" money.
If your daily account value was 40k for the first six months of the year, and 60k for the last six months of the year, then your average value is 50k and you'd pay no tax.
So you wouldn't pay tax on each day that the value was over 50k.
Victor Carrera
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Average = Total daily amount/365.
A common misconception is that any excess greater than 50,000 results in a tax liability.
Simple example: 40,000 for 6 months and 60,000 for 6months = No tax liability.
If close to the limit one strategy would be to monitor and sell as appropriate equally after analysis of assets holding and accept the small tax may return a net gain or sell as appropriate.
Touché Corola !
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Thanks @Victor Carrera - that makes sense.
Have they clarified when the tax is taken?
Have they clarified when the tax is taken?
Victor Carrera
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Not that I have heard of. I speculate that tax liability calculated on Jan 1st and a settlement deadline in due course (to be announced in Finance Bill in 2 weeks or so and enacted mid December.)
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I don't think it's investing in derivatives like an active fund might, they're saying they may use derivatives. In a tracker - it might be trying to ensure they're not caught out with an index jumping in value while they've substantial cash waiting to be invested. They buy futures for the stocks they know they'll be buying - but can't because e.g. dividends due to arrive haven't landed yet.
They can't afford to allow competitors be more efficient at handling their funds so things probably get complicated behind the scenes.
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Duke of Marmalade
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"may" is good enough for providers not to allow their use in a SIA.
I really don't know what their issue is with derivatives. Crypto for sure should be verboten.
Duke of Marmalade
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I am not sure about that. I presume that you as an individual and your SIA are separate taxable entities.
Earlier briefings have talked about in specie transfers. As I understand the term the ownership of the asset changes but no physical transactions take place. For tax purposes a notional sell and repo is taking place at the then market price.
I assumed they simply don't want individuals trading derivatives directly in this new account.
Even brokers like Interactive Brokers close derivatives off until the customer can to some (limited) extent show they might know what they're doing.
If a UCITS Tracker ETF behind the scenes, with the full blessing of the CBI, is using derivatives to efficiently manage their portfolio - that should be fine.
Duke of Marmalade
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Totally agree in principle. Will the legislation be that flexible?
Lads can anyone validate some numbers here for me.
Running the below on the basis that the new SIA will keep with higher AMC currently offered by the Zurich of the world
ETF fees taken from T212 for example
It appears to me that a return of above 6% is required for the SIA to get the better of the traditional ETF investment.
I have ran the following
SIA
6% return
1.25% AMC
12k yearly
1% on amounts above 50k
Final fund value €426,817
ETF
6% Return
0.23% AMC /TER (T212) or similiar
12k yearly deposit
Deemed disposal every 8 years 35%
Exit Tax 35%
€424,344
Would appreciate a sanity check if possible
Running the below on the basis that the new SIA will keep with higher AMC currently offered by the Zurich of the world
ETF fees taken from T212 for example
It appears to me that a return of above 6% is required for the SIA to get the better of the traditional ETF investment.
I have ran the following
SIA
6% return
1.25% AMC
12k yearly
1% on amounts above 50k
Final fund value €426,817
ETF
6% Return
0.23% AMC /TER (T212) or similiar
12k yearly deposit
Deemed disposal every 8 years 35%
Exit Tax 35%
€424,344
Would appreciate a sanity check if possible
Maybe the spreadsheet(s?) mentioned here could be extended to also cover the SIA (or whatever it's being called today)?