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How the the Tax Aid works

How the tax aid works

Online Investments Tax Information

We have developed the tax aid to help you when making your annual returns to the Revenue.

When you sell an investment you are liable to pay 30%*on the total increase in value of the investment, provided you include details of the profit realised on your disposal of the investment in your annual tax returns and submit this to the Revenue by 31st October following the tax year in question.

The tax aid provides you with a statement which would show any gains you have made in a fund since RaboDirect set up online investments in 2005. If you have made multiple investments into the same fund and then sell units in this fund, the gain will be calculated using the First in First out (FIFO) method.

To access the tax aid you must:

•Log into your secure account.

•Select the tax aid option on the left hand navigation.

•A Welcome Screen then appears explaining how to use the tax aid

•Once you have agreed to the terms and conditions you can then generate a pdf statement by choosing the financial year you wish to generate the statement for.

•The PDF will then open up as an Acrobat file which you can print if you wish.

•The first page of the tax aid statement shows you the total profit, the second page shows you the profit made on each buy and sell into the fund(s).

•And finally, we have set out in three easy steps how you complete the Revenue tax form as the final step in making your annual tax returns.
          

What is First In First Out (FIFO)?

First In First Out (FIFO) is related to your tax liability if you buy units in the same RaboDirect fund at different times and then sell some of these units.

First In First Out (FIFO) is the method of calculating the tax charge where a person holds units in the same fund which have been purchased at different dates.  F.I.F.O is where the units bought at the earlier date are considered to be disposed of first. The example below explanes how F.I.F.O works:

For example:

2006 bought 100 units in X fund @ €1 per unit

2007 bought 100 units in X fund @ €2 per unit

2008 sold 150 units in X fund at @ €3 per unit

Total Gain =

150 units @ €3 (sold in 2007)= €450

So following the FIFO rule

100 units (bought first in 2006) @ €1= €100

Then

50 units (of the 100 units bought in 2007) @ €2= €100

Total amount liable for tax is the gain made from the transaction so

€450-€200= €250

Therefore the investor is liable to pay tax on the €250 gain he/she made

This example is for illustrative purposes only.

This is only a general tax summary. Individual circumstances may differ. The tax situation may change in the future. Taxation is a complicated issue and we recommend that you seek advice from a tax adviser.

Tax Overview

* Based on current tax legislation, any gains made on investment funds will be taxed at 30% on sales concluded up to 31 December 2011. From 1 January 2012 onwards, any gains made on investment funds will be taxed at 33%.