Q&A Dominic Coyle
Will I lose out if I sell Vodafone shares?
I hold 5,000 Vodafone shares, so I was very interested in your response to the Vodafone query in last week’s paper. If I sell my Vodafone shares between now and the first quarter of 2014, will I lose out? In other words, on what date does one have to hold the Vodafone shares to qualify for the payout.
Mr P.M., Dublin
Good question. After all these years, you wouldn’t want to lose out by recklessly selling your shares ahead of the payout, although one assumes the price of shares in the market will reflect entitlement to a payout or not – i.e. the shares are likely to fall in price once the relevant date passes.
That date is generally called the “record date” and, in this case, it has not yet been determined, or communicated, by Vodafone.
Only when Vodafone has satisfied the conditions required to complete the Verizon deal – including securing UK court approval – will it be able to establish the record date.
If you sell before the record date, you lose entitlement to the payout: sell after the record date and the new owner does not have any entitlement. It is essentially the date on which the company closes the share ownership register for the purposes of qualifying for the Verizon distribution.
The company has committed to inform shareholders in December of the position regarding the Verizon deal, the extraordinary general meeting in January which will be required to approve it and details of the promised payout.
But it will be sometime later before it is able to announce the record date: the best the company will say at the moment in its timetable for this deal is that it will happen in the first quarter, but then it expects the deal to close in the first quarter, which may yet be delayed.
What are gift tax limits?
I have been looking for information on Gift Tax thresholds. I tried to get this information from a bank but they did not have any document available to give me details and suggested I contact a financial advisor. I have no children but my siblings have grown children and I was considering gifting money to nieces/nephews to help fund educational costs. I am non-resident in Ireland and am not familiar with the system.
Is there a set ruling that allows for a certain amount to be gifted in cash to each child (or parents of the child) that would be clear of any gift tax? I thought I read somewhere that a beneficiary can receive up to €40,000 before being liable for tax?
Ms K.O’B., email
You do wish sometimes that our banks would take the time to train their staff in some of the basics of customer service beyond their noticeable courtesy and politeness. They might argue that finding the financial resources to do so is difficult in the current environment but, unfortunately, my experience is that customers were similarly misdirected right during the boom when the banks didn’t know what to do with all the money they had available.
For anyone else in this position, there is absolutely no reason to have to resort to a financial adviser. I’d assume commission-based financial advisors looking to make a living have better things to do than outline the basics of gift tax for which they will never get paid.
And fee-based advisers will naturally charge you for information that is available free online either from the Revenue Commissioners (www.revenue.ie/en/tax/cat/leaflets/cat1.html) or Citizens’ Information (http://iti.ms/17hVdy0).
You say you are non-resident so you would need to check on the law as it applies in your own jurisdiction but, for Irish taxpayers, the onus for tax liability is on the beneficiary of the money.
Anyone is able to receive up to €3,000 in any tax year (which is the same as the calendar year here) without any consideration of gift tax, more formally known as capital acquisitions tax.
Over that threshold, there are three categories for gifts and/or inheritances and recipients need to aggregate (add together) gifts received within each category regardless of who is making the gift to them.
Category A relates generally to gifts/inheritances from parents to children; category B on payments between other “linear” relations, including an aunt to a niece or nephew, or between siblings; and category C for all other such payments between “strangers”, including in-laws.
The current lifetime threshold for Category B is €30,150 (over and above the annual €3,000 small gift exemption sums) – a figure that has fallen from €43,400 in 2009.
This column is a reader service and is not intended to replace professional advice. Please send your questions to Q&A, c/o Dominic Coyle, The Irish Times, 24-28 Tara Street, Dublin 2, or to email@example.com