It is assumed that the Deputy is referring to special portfolio investment accounts, SPIAs, which were given favourable tax treatment by section 14 of the Finance Act, 1993.
Income and gains on these accounts, including capital gains, were taxed at a single low rate, initially 10%. Income and gains for this purpose include the growth in the value of any investments in the account. In calculating tax payable investments were deemed to have been disposed of and immediately re-acquired by the designated broker at the end of each tax year. In the context of investment being treated as having been rolled over annually, indexation was not appropriate as indexation does not apply to assets acquired and disposed of within 12 months.
The accounts were operated by designated brokers who had to be members of the Irish Stock Exchange or of a stock exchange in the EU.
The rate of tax which originally applied to SPIAs was 10%. This rate was increased to 15% with effect from 6 April 1995 and to 20% with effect from 6 April 1998. As the capital gains tax rate was reduced from 40% to 20% with effect from December 1997, it appears the SPIAs were no longer an attractive investment and that many stock brokers ceased to operate the accounts. Termination of a SPIA would be a matter for agreement between the broker and the client as would any question of commissions.
The Revenue Commissioners inform me that they do not have details of amounts invested in SPIAs or the amounts withdrawn from the accounts in recent years. However, the tax yield from SPIAs has dropped substantially over the past number of years. For example, the yield for 1997-98 was £12 million while the yield for 1999-2000 was just £1.1 million.
