A charge to capital gains tax arises in respect of chargeable gains accruing on the disposal of assets. Such gains are computed in accordance with the provisions of the capital gains tax Acts. The charge extends to individuals, companies and unincorporated bodies of persons. CGT has no connection with income, which is the basis for income tax. The CGT liability of an individual is computed, irrespective of age, by reference to the chargeable gain on the disposal.
I have been advised by the Revenue Commissioners that as many shareholders might not ordinarily be expected to be familiar with capital gains tax provisions, they have written to First Active members who received payment from the Royal Bank of Scotland in respect of its acquisition of First Active. Revenue informed them of a potential CGT liability arising from the disposal of the shares and how to make a payment of any CGT liability. This was to ensure that people do not inadvertently incur interest which could arise if payment was not made on time. Any CGT liability on disposal of these shares was due for payment on or before 31 October 2004.
From the information supplied to the Revenue Commissioners, the person referred to by the Deputy received a payment of €3,069 from Royal Bank of Scotland and, provided she had no other gain or loss, her CGT liability is calculated as follows:
Cash Received
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€3,069
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Allowable Costs
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Nil (as the shares were acquired at no cost they have a nil base)
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Chargeable Gain
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€3,069
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Less Personal Exemption
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(€1,270)
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Net Chargeable Gain
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€1,799 @ 20% = €359.80
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The chargeable gain above can be reduced by any allowable losses arising in 2004 together with any unused allowable losses from disposals of assets chargeable to capital gains tax in any previous year. This is the standard method and was used in other disbursements of free shares in the past few years.
I have also been informed by the Revenue Commissioners that the Revenue documentation that the person received includes a computation sheet and a payslip. The payslip and payment should be sent to the Collector General's office. The documentation issued also includes a special Revenue helpline number for any further assistance required by the person referred to by the Deputy.