Tax liability on Company Shares

[CorkHombre]

Hi there,
My wife is working for a company where they operate a scheme whereby you can convert your bonus to shares and hold onto it for 3 years you will avoid income tax on it (at least that is my understanding of it) I am now wondering what our tax liabilities are on this as the shares have appreciated in value
(Dec 2013) ---Purchased shares 3000 Euro
(December 2016) -- Sold shares 4500 Euro
Dividends 200 Euro per year over 3 year

This is what I think I owe
4500-2000=2500 (This is the Capital gains on the shares)
2500-1270 (CGT Tax Free Allowance)=1230 (This is how much is taxable)

Questions
-----------------------------

• Am I correct in saying that we owe CGT of 1230 x 30%=369 Euro
• When is it due to be paid (Oct 31 2017?)
• How do you pay it?
• We have not declared any dividends over 3 years 600 Euro how do I sort this out
• Anything I can do to lower my Tax liability (I suppose I could put it into a pension?)

 

[dub_nerd]

Am I correct in saying that we owe CGT of 1230 x 30%=369 Euro

You seem to have a mistake somewhere. Your post says the shares were bought at 3,000 not 2,000 so the CGT looks like (4500 - 3000 -1270) x 30% = 69. But yes, you have the basic gist of it right.

When is it due to be paid (Oct 31 2017?)

No, this is a common misconception. You have to file your tax return by 31-Oct-2017. The tax was due on 15-Jan-2017 (or 15-Dec-2016 for anything sold up to 30-Nov-2016). You may be charged a 10% surcharge for late payment.

How do you pay it?

You can make a payment through ROS. If you are not registered for ROS you can phone Revenue who can collect it by credit card over the phone. I imagine there's other ways too (posting a cheque?) but I'm not sure.

We have not declared any dividends over 3 years 600 Euro how do I sort this out

The dividends are subject to income tax at your marginal rate. You could file a Form 12 (assuming you don't already normally file a Form 11 or 12) for each of the years involved. Revenue will adjust your tax for those years. Again, your payments are late and you may get a late payment surcharge for the years before 2016 but there won't be any other repercussions. As far as I know, CGT can also be declared on Form 12 so you can kill two birds with one stone.

Anything I can do to lower my Tax liability (I suppose I could put it into a pension?)

Don't know, sorry.

 

[torblednam]

Point of clarification to DN's excellent post above:

A surcharge applies to returns FILED late.

Interest applies to late PAYMENT.

 

[conastatu]

I just logged on to post a similar question to the OP, so very happ to see this post. Never understood before that the filing date & the payment date are different....why? So this means that I will have to pay interest on shares sold last year then even if I file next week? For future reference, is it possible to pay & file at the same time?

An additional question....the shares I cashed in 2016 were actually bought in 2012...I transferred them to a stockbroker for a year before selling them. Does the make any difference? e.g. Can I offset any pod their charges against tax?

 

[dub_nerd]

constatu: the payment dates I referred to apply to Capital Gains Tax only. See Revenue's [broken link removed] for more info. For CGT purposes the year is split up into an initial period (up to 30-Nov) and a later period (to 31-Dec). The payment dates are 15-Dec for the initial period and 31-Jan for the later period (not 15-Jan as I mistakenly said earlier). Why? Because Revenue want to get their hands on their (a.k.a your) money as soon as humanly possible.

You can't file your tax return before the end of the year, so for CGT on shares sold in the initial period, no, you can't pay and file at the same time. You must make an up front payment separately. And if you file a Form 11 later it asks you how much of your gains occurred in each of the periods, so you can't fudge it.

Your gain on shares is net of any charges on the buy/sell transactions, e.g. commission, fx charges, stamp duty. But you can't offset any other ongoing costs such as account or maintenance fees etc.