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Parliamentary Question to Minister for Finance re: Standard Life Shares

QUESTION NO: 127

DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)

by Deputy Anthony Lawlor

for WRITTEN ANSWER on 06/05/2015

To ask the Minister for Finance the steps he is taking to ensure that the 4,000 Standard Life shareholders, who opted to receive their money from the sale of the business as a capital payment, will not suffer a financial loss or be subject to tax as a result of significant postal delays, through no fault of their own; if he will liaise with the Revenue Commissioners, and introduce a measure similar to that undertaken in 2014, in a similar incident with Vodafone shareholders; and if he will make a statement on the matter.

REPLY.

I understand that the UK company, Standard Life plc, has offered its shareholders the option of having “return of value” payments due to them treated as income or capital, with treatment as income being the default position in the absence of shareholders choosing an option within a specified time which has now elapsed. From an Irish tax perspective, the position is that if the Standard Life return of value payment is received as income by an Irish resident taxpayer it will be taxed under Income Tax rules. If it is received as capital it will be taxed under the Capital Gains Tax rules.

In last year’s Finance Act, I included provisions allowing for a measure of tax relief to the many thousands of Irish shareholders with a small shareholding in Vodafone plc who inadvertently found themselves subject to an unintended liability to income tax, PRSI and USC rather than a nil capital gains tax liability arising from a return of value payment from that company. I did this because the shareholding of very many of those individuals arose originally from their investment in Eircom plc and, as a result of which investment, they continue to carry capital losses. I considered, given the particular background in this case, that to leave those shareholders with income tax and other liabilities on foot of a decision they inadvertently made or didn’t make at all would have been inequitable.  This particular background is not a feature of the Standard Life return of value case.

The fact that notifications of the options made by individuals in the Vodafone case last year were delayed in the post beyond the deadline date in that case or were otherwise not dealt with by the company as shareholders would have wished were not factors in my decision to provide the relief, the reason for which I have outlined above.

I will continue to be advised by my officials, in liaison with the Revenue Commissioners, in relation to the issues raised by the Deputy in the case of the Standard Life return of value. However I am not convinced of the appropriateness of the State, as a matter of practice, addressing by way of legislation the difficulties of shareholders in commercial public companies arising from a failure either to make decisions in relation to their commercial investments, the timely communication of decisions or arising from problems caused by the administrative arrangements put in place by those commercial companies.