Tax Liability on Shares / Dividends

D

Dman35

Registered User
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54
Hi Folks,

I'm hoping to get some guidance on what tax I'm liable for buying / selling shares and assoicated dividends.

I'm a PAYE worker who has a few shares in a couple of different companies on the Irish, UK and US exchanges, and wondering about my tax liability.

1. Do I need to pay tax on any dividends I get? I see from the dividend payments receipt there is a withholding (i think it's called) tax already taken. Is that my liability paid?

2. I presume I need to pay tax on any profit I make from Share sales however can I write off any lose against these profits? Is this the case for shares brought outside of Ireland i.e. US, Canda or England?

3. Do you need to do a tax return at the end of the yr or is it the end of Oct?? Is there some form I need to complete? Is it for the calendar yr?

Thanks very much for any assistance / advice you can give..

Regards
 
Dman35 said:
Hi Folks,

I'm hoping to get some guidance on what tax I'm liable for buying / selling shares and assoicated dividends.

I'm a PAYE worker who has a few shares in a couple of different companies on the Irish, UK and US exchanges, and wondering about my tax liability.

1. Do I need to pay tax on any dividends I get? I see from the dividend payments receipt there is a withholding (i think it's called) tax already taken. Is that my liability paid?

2. I presume I need to pay tax on any profit I make from Share sales however can I write off any lose against these profits? Is this the case for shares brought outside of Ireland i.e. US, Canda or England?

3. Do you need to do a tax return at the end of the yr or is it the end of Oct?? Is there some form I need to complete? Is it for the calendar yr?

Thanks very much for any assistance / advice you can give..

Regards
Click to expand...

With regard to dividends, the withholding tax is taken at the lower rate, but you are obliged to pay the difference between the lower and the higher rate if your income is taxed at the higher rate. You should declare the dividend earned under 'Distributions' as an income, and the tax already paid under Withholding Tax and they will work out the liability. It should be 21% of the dividend earned on the basis of a higher rate of 41% (given that withholding tax is at 20%)
 
Thanks for your response MeathCommute.

By any chance do you know if there is a particular form I need to complete to do the return? And is it required by the end of Oct or End of Dec??

Thanks
Dermot
 
Hmmm...

This comes up quite a bit, and it would be useful for you to do some more research and reading, as I think this can be a complicated area.

When you talk about the "withholding tax", I'm wondering who took this because there are several scenarios which might be applicable.

US brokers will usually take a 15% withholding tax on dividends. You will then declare your gross dividend on form 11, and revenue will assume the 15% was paid and charge you for the remainder 41% total plus levies.

UK brokers will apply a 20% withholding tax, however, and I'm not certain of this... but it has been mentioned before... because the terms of the treaty between the UK and Ireland differs from the US system, that withheld tax may not be offset against your liability. You will declare your gross dividend on form 11, and revenue will charge you 41% total plus levies, leading to you paying 60-70% tax on such a dividend.

Shares managed by Irish organisations may apply a 20% withholding tax, which is paid to Revenue, and will be offset again your further liability. This Irish tax paid can be listed on the Form 11.

Ix.
 
Dman35 said:
2. I presume I need to pay tax on any profit I make from Share sales however can I write off any lose against these profits? Is this the case for shares brought outside of Ireland i.e. US, Canda or England?

3. Do you need to do a tax return at the end of the yr or is it the end of Oct?? Is there some form I need to complete? Is it for the calendar yr?

Regards
Click to expand...

Regarding profits (Capital Gains) you can do a total calculation for all items, and pay 25% on any total gain (the first 1270 is excluded). It's your responsibility to calculate the exchange rates appropriately.

The tax year runs Jan 1 -> Dec 31, but the tax form 11 long or 12 short should be completed by Oct 31 of the following year. However!! Note that you may have a tax liability due sooner. For example, capital gains tax must be paid by the end of January of the following year (in fact it's even more complicated than that, with 2 CGT period in a year but anyhow...)

I guess it's worth mentioning that while it is critical to pay your tax on time and keep good documentation, if the sums involved are small, Revenue may be content with a CG1 form, and a letter plus cheque for the dividends. A full tax return is not necessarily required.

Ix.
 
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