The Roadmap for Deemed Disposal

Sarenco said:
Simon says Ireland needs to “move beyond” deemed disposal.

Whatever that means!
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Maybe they could try to simplify it, while retaining the periodic payments.

For example, you must pay it once every 8 years on the entire balance. This would mean less admin figuring out individual purchases (and making weekly/monthly investments feasible).
 
Let’s just say deemed disposal was disposed of next year. Would it likely mean that ETF gains made say 7 years ago would still be subject to the tax or would all ETF gains be exempt until sale?
 
Neither. Somewhere in the middle. DD won't be abolished without "retaining necessary and important anti-avoidance protections, in a proportionate manner"*

*Quote from Simon Harris answers to PQs.

Your 7 year old ETFs won't have DD but also won't have indefinite deferral of tax. There will be a different mechanism to collect tax periodically.

From the Roadmap:
The rule was originally introduced as an anti-avoidance measure to protect the Exchequer, and its complete removal could lead to unintended consequences and (re)create opportunities for tax avoidance.

Detailed consideration will be required of the guardrails necessary to ensure that opportunities for the types of tax avoidance that the presence of the deemed disposal rule deters, or mitigates, are not created.
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Corola said:
"retaining necessary and important anti-avoidance protections,
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That's what the Anti DD mob tend to forget. They think a regime with indefinite deferral of CGT until it disappears entirely on death will be applied to accumulator ETFs and most of the passive index trackers are accumulators.
 
Duke of Marmalade said:
Clearly ETFs are collateral victims of the LAET regime which at a CGT+2% would be acceptable to life companies.
Distributer ETFs should be subject to CGT/IT and Accumulator ETFs should either be subject to 8 year DD or annual Deemed distribution
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This seems reasonable but the most egregious part of the matter is that gains on etfs are not allowable against losses on CGT assets. This needs to be addressed more urgently.
 
Banquo said:
This seems reasonable but the most egregious part of the matter is that gains on etfs are not allowable against losses on CGT assets. This needs to be addressed more urgently.
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And worse still losses on ETFs are not allowable against gains on ETFs.
It’s all part of the same misfit. LAET almost by definition was born as a special tax on life policies.
Life policies are essentially buy and hold for a very long time. The idea of losses on life policies was considered theoretical and there was only token objection to the inability to set losses on life policies against LAET on other life policies.
The idea of using CGT losses to offset LAET wasn’t even considered. No more than using CGT losses to claim back DIRT.
ETFs should definitely have been subject to the CGT regime and were to begin with as after all they are just shares. But the accumulator versions would clearly make available the very anti avoidance that Deemed Disposal was meant to close off.
It was a very crude measure to subject ETFs to LAET/DD and for sure distributor versions should not have been included.
 
LarryScott said:
For example, you must pay it once every 8 years on the entire balance. This would mean less admin figuring out individual purchases (and making weekly/monthly investments feasible).
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I believe that is how it works on life assurance policies?

You only pay DD on the 8th, 16th, 24th anniversary of the policy inception date, even if you are paying regular premiums. Where the gain is the total gain on the policy, not just the first year's tranche of premium.
 
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Corola said:
I believe that is how it works on life assurance policies?
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Yes. One sees the essential difference between life policies and ETFs. Each ETF purchase is a standalone legal transaction. The concept of an individual having their own ETF calendar i.e. the 8 year cycle begins at the first date on which you purchased your current holdings might work but would have its own anomalies e.g. I bought €1 of XYZ online with Revolut just as a trial 8 years ago but bought €100k of XYZ a year ago.
This is all self assessment and I think you could actually agree with Revenue to accept this approach or similar as a matter of convenience.
 
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