Questions and Answers

Eircom

Following advice in this column, I have succeeded in getting payment for my Eircom shares compulsorily acquired by Valentia after corresponding with the registrar and establishing my identification and entitlement to payment.

I enclose the document which accompanied the payment and you will notice that €9 has been charged for the holding of my payment and DIRT has been deducted at 25 per cent. These charges also apply to four other members of my family. Is Computershare entitled to the €9 holding charge? IS DIRT applicable despite the fact that we all suffered a loss on our investment?

Mr N.D., Limerick

You really are not having a lot of luck in sorting out your Eircom shareholding.

I'm glad to see that you have received the payment but share your concern about the deductions. The €9 charge related to the cost involved in holding on to your shares for this length of time. Computershare, the registrar for Eircom, set up a trust to hold the money owing on shares which had not been surrendered despite the compulsory purchase of the company's stock by Valentia on completion of the takeover of the former State telecoms group.

Eircom did send out letters to recalcitrant shareholders back in March, telling them that unless they handed in their Eircom share certificates by April 23rd, they would face charges for maintaining the shares.

However, I know from previous correspondence that you state you sent back your share certificates to Computershare in January, well ahead of this deadline.

While there was a mix-up over what happened to those share certificates, I think you should certainly ask Computershare to waive the charge in the case of you and your family as they have already accepted your identity without the certificates for the purposes of payment, which presumably means they give some credence to your assertion about the timing of your surrender of the shares.

As to DIRT, that is not being charged on all the money paid to you but only on the interest accrued on the money owing since the closure of the deal, so I cannot imagine it is a lot.

One other thing, DIRT is deducted at 20 per cent, not 25 per cent.

Mortgages

I have a quick question about mortgage interest relief that has been bothering me.

My wife and I bought a house in May of 2001. Since it was our first property, we are entitled to mortgage interest relief on up to £5,000 of interest paid for the first five years.

My question is this: does the 'five-year' period refer to five 'tax-years' or five actual years?

Since the 2001 tax year was only nine months, we will only get the increased relief for four years and nine months, instead of a full five years if, as I suspect, the Revenue Commissioners only operate to "tax years". Of course, getting 4.75 years of increased relief instead of five years probably doesn't amount to a big loss, but when you add it all up, it must be saving the Government millions

Mr S.D., Dublin

Your assumption is correct. When assessing entitlement to mortgage interest relief, the tax authorities look at tax years.

That means that people in your position will only benefit for nine months in the first of your tax years as the Government inserted a short tax year from April to December 2001 in order to move the tax-year basis to a calendar year.

Of course, it may make no difference to you at all given the scale of current mortgages.

If you had managed to pay £5,000 (€6,350) in interest in that nine-month period, you would have qualified for the maximum mortgage interest relief.

If not you would lose out to the tune of one-fifth of whatever shortfall on €6,350 there was in interest paid that year - you get relief at 20 per cent of the interest paid up to the maximum of €6,350, total available relief of €1,270.

As you say, it is not a lot but most first-time buyers would wish to see it in their pockets rather than those of the State.

One other point to note is that the relevant tax year is the one in which the first payment is made, not when the loan was drawn down or the property bought.

For instance, if you bought in November or December 2001 but did not make your first mortgage payment until January 2002, the latter year is the one that counts for the purposes of tax.

Smurfit

When will Jefferson Smurfit pay the money they owe their shareholders as a result of the takeover by Madison Dearborn Partners? I am now getting anxious.

Mr B.McC., Dublin

The offer by Madison Dearborn for Jefferson Smurfit was declared unconditional on September 3rd. Any acceptances received by the date should have resulted in shareholders receiving their money by September 17th.

If I am right, you had your acceptance in by that date because you wrote previously about the company having control of your share certificate before the closure of the deal and not paying the money. In that case, you should immediately contact the helpline number (01) 8202494 to find out what has happened. If, on the other hand, you still hold your share certificate, you will need to surrender this before you receive payment.

Once the offer has been declared unconditional, you have nothing to gain by holding out as the company has the legal right to buy those shares.

An Post

Savings in the Post Office are tax free while one is living. In the event of death, do such savings become part of one's estate and therefore liable to taxation?

Mr A.R., Dublin

When you die, all your assets form part of your estate. This is true for An Post savings as it is for any other form of saving or investment. As you have guessed, once it is part of your estate, it also comes under the aegis of capital acquisition tax, more popularly known as inheritance tax.

Of course, depending on how you allocate that estate in a will, you may reduce or even rule out the prospects of capital acquisitions tax. You can bequeath more than €400,000 to any of your children, in excess of €40,000 to siblings, nieces/nephews or grandchildren and more that €20,000 without them paying inheritance tax, unless, of course, they have received other gifts or inheritances which take them above those limits.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.