Making a CGT return when no tax is due

Q I recently placed €5,000 into online stock broker DeGiro in four stages and purchased Bank of Ireland shares at various prices below 19 cent. I sold them two weeks ago at 20 cent (prematurely, as they later hit 23 cent).

I have left the funds and gains in my DeGiro account for the moment but will probably transfer them to my bank account soon. Do I need to make a return to revenue on this transaction even though it is below the €1,270 allowance annually for CGT?

Mr FK, Carlow

A: The good news is that you made a gain on the investment. A single cent may not sound like a lot but on a 19 cent share, it’s a gain of more than 5 per cent. Given the returns on offer in the deposit savings market, that’s attractive.

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For sure, the shares continued to advance after you sold yours but you really don’t want to worry too much about that. Millions have been lost by people who want to maximise their gains on investments – just ask Ireland’s legion of Telecom Éireann shareholders. Much better to lock in your gains and, quite possibly, leave something on the table for the next investor.

Turning to the kernel of your question, the answer is that you do not have to file a capital gains tax return if the gain you have made in the year is below the €1,270 exemption limit.

But, should you make more significant gains down the line or, worse, have capital losses that you need to set off against subsequent gains, bear in mind that the Revenue will generally require a return – even if the net gain after all the deductions is below the €1,270 level.

The Revenue’s own Frequently Asked Questions document on the issue of capital gains state explicitly: “Irrespective of whether you have submitted a payment, or whether the gain is relieved from tax or a loss arises on the disposal, you must submit a tax return to Revenue in respect of any disposals.”

So the only case where you do not have to make a return is in the circumstances where you find yourself – you have made a gain but it is under the annual threshold below which no capital gains tax is due.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.