The Roadmap for Deemed Disposal

[faketales]

while maintaining the underlying gross roll-up regime for investment funds and life
assurance products, which is an important aspect of Ireland’s success in the financial services
sector.

Surly Irelands success in financial services is unrelated to how gross roll up is applied here?

 

[Brendan Burgess]

Folks, I am close to closing this forum as it's requiring too much moderation.

This thread is about deemed disposal. Not yet another thread to let off steam.

You can discuss any aspect of the roadmap but do it within the right thread.

 

[Greenbook]

What is causing all the foot dragging on deemed disposal, its clear Simon Harris wants it gone, there have been multiple questions anout it in the dail and yet they are not able to move on it. Is there some secret hand behind the scenes holding it all up?

I think that senior civil servants in the Dept of Finance are against abolishing it. They see ETFs as tax avoidance vehicles pure and simple. Hence the footdragging. I've long thought that in any government Department, the real power is with the civil servants.

 

[Duke of Marmalade]

I have repeated in these fora that the tail wagging the dog is the Life products.

Life assurance products are mentioned 38 times in the Roadmap.

 

[yellowmoose]

I suspect the powers that be are hoping that a large part of the bank deposits total is a lot of small holdings that will move to the new SIA and they can get away with minimal changes to DD/CGT so they can continue to milk those that have significant investments.

 

[Fortune]

Life assurance products are mentioned 38 times in the Roadmap

I'm going to guess that the life assurance fund value held by Irish investors is at least 38 times greater than Irish ETF investment.

 

[joe sod]

I'm going to guess that the life assurance fund value held by Irish investors is at least 38 times greater than Irish ETF investment.

Surely this is very suspect that a private industry has such control and say into what a government department or minister decides to do. What other industry as this level of influence and access to government?

 

[Fortune]

What other industry as this level of influence and access to government?

• Publicans
• Farmers
• Road haulage
• Civil service unions
• Banking
• Hoteliers
• Big tech
• Construction industry

 

[Djimi Traore]

So without deemed disposal then ETFs are used as a vehicle for tax avoidance? Yet I can invest in Berkshire Hathaway shares, watch them grow for decades and see the CGT wiped out on my demise, but that's perfectly fine?

 

[Fortune]

and see the CGT wiped out on my demise, but that's perfectly fine?

Yep. An ETF which is subject to exit tax on death is tax avoidance.

 

[Duke of Marmalade]

Yet I can invest in Berkshire Hathaway shares, watch them grow for decades and see the CGT wiped out on my demise, but that's perfectly fine?

Are you sure? Taxation in this space is self assessment. ETFs are caught by DD because they are shared which resemble collective investments like Life funds. Ask Revenue does this catch BH. I doubt you will get the answer you want.

 

[Brendan Burgess]

Berkshire is just an ordinary quoted share which pays no dividends.

 

[Duke of Marmalade]

Berkshire is just an ordinary quoted share which pays no dividends

And so are accumulator ETFs. I am going to ask the Revenue through my online portal whether BH is subject to DD since it is no different in substance from an accumulator ETF share.
Substance over form is the key.

 

[Nordkapp]

And so are accumulator ETFs. I am going to ask the Revenue through my online portal whether BH is subject to DD since it is no different in substance from an accumulator ETF share.

Both are listed shares, traded on exchange, as are many individual shares.

The country is lagging behind the rest of the world in the treatment of ETFs here. DD8 is a disincentive to invest. Bear in mind, low cost online brokers don’t want to be doing DD8 tax returns to revenue.

Are the government afraid retail investors might actually get a better return on ETF investment over leaving money deflate at the bank’s paltry rates on offer?

I actually don’t think you will get an answer….

 

[Duke of Marmalade]

actually don’t think you will get an answer…

Probably, that would put me off BH.

 

[Brendan Burgess]

Ryanair did not pay dividends for years. There was no talk of deemed disposal on the increase in value after 8 years.

 

[Duke of Marmalade]

Ryanair did not pay dividends for years.

Come on, Boss. There is no way Ryanair is similar to a collective investment fund.

 

[Corola]

Substance over form is the key.

Not paying dividends is not the same as gross roll-up.

BH is still paying tax on its investment portfolio when it receives dividends or realises gains on the companies it holds, albeit to the IRS not to Irish Revenue.

Whereas an accumulating ETF doesn't pay tax when it receives dividends or realises gains from the companies it holds in the fund, other than 15% withholding tax on US dividends.

They are different in substance and in form.

 

[ClubMan]

There is no way Ryanair is similar to a collective investment fund.

BH is objectively not an investment fund. It's a conglomerate company that owns (a) wholly owned/operated private businesses (b) shares in publicly listed companies and (c) cash and equivalents, and which has never paid dividends to shareholders.

Disclaimer: I'm a shareholder.

 

[Nordkapp]

So they are different in substance and in form.

They are still a listed share, CGT 1, or whatever they call that form, asks that simple question, I know a few people that use that interpretation when filing gains for ETFs and file them under CGT arrangements, not DD