An Irish Times guide to the world of personal finance.

Card charges

I recently surrendered my Laser cum cheque guarantee card. My bank (AIB) told me that so long as I had not used the Laser card since Budget day I would not be liable for the new Government stamp duty, the implication being that if a card was used after Budget day, stamp duty would be payable.

My bank has since issued me a stand-alone cheque guarantee card, telling me that these do not attract stamp duty. However, I have read elsewhere that cheque guarantee cards will attract the new stamp duty. Can you clarify the position please?

P.F., Dublin

That's interesting. I had not realised that those sensible souls who had not used their Laser cards since the Budget might escape the stamp duty and, to be fair, it seems that no-one is yet sure if that is the case, including AIB, regardless of what your local bank may have told you. Even the Department of Finance was unable to come up with an answer and it was their Minister who announced the change.

The situation will become clearer at the start of next month with the publication of the Finance Bill, which brings the Budget measures into law and determines how exactly they will be implemented.

I certainly would not be surprised if you found yourself having to pay stamp duty. After all, I cannot imagine that the Minister would sanction a proposition where bank customers would have the Laser facility post-Budget but would only be charged should they use it.

It would also raise question on whether customers with the cheque guarantee/Laser cards could avoid the charge ad infinitum if they used only the cheque guarantee service.

If you want to avoid the stamp duty in the future, by all means return the card but expect to pay this time around. The charge is liable to be levied on your account in April.

On the second point, the situation is clearcut. There is no stamp duty on a cheque guarantee card but there is stamp duty on every cheque you write, regardless of whether you back it with the card. That charge rose in the Budget to 15 cents per cheque from eight cents previously.

Loan notes

Minister McCreevy's Budget for 2003 included the abolition on loan note carry-forward for capital gains tax.

Last year my mother received about €4,250 in Abbey National loan notes arising from the takeover of Scottish Provident. She cashed in €900 during 2002, intending to draw down the balance over the next three years while keeping within her annual capital gains tax threshold of €1,270 annually.

Will she now be precluded from continuing from this under the new Budget rules?

Mr D.MacD., e-mail

Your mother does not have to worry. It is true that the loan note regime was amended in the Budget but, according to Mr Niall Glynn, senior tax manager at Ernst & Young, it will not affect people in her position.Tax managers at the three major accountancy firms confirm that the change will only affect people who received notes as a result of transactions on or after the Budget date, December 4th last.

Until publication of the Finance Bill, there is always the prospect of change but basically the new rules mean that anyone swapping shares in a company for loan notes following a sale/takeover on or after Budget Day will face a capital gains tax charge on the shares as they have now been disposed of for a loan note, which is equated with cash. Until the last Budget, such transactions were seen as neutral, with no tax charge arising until the loan notes themselves were cashed or sold on.

The measure is not retrospective and, in any case, as your mother is redeeming less than her capital gains tax allowance on an annual basis, she would not be facing a bill for tax on the loan notes.

Dividends

My wife and I are 73 years of age. Our total income from the old age pension, private pension and dividends is below our tax-exemption limit of €30,000.

Withholding tax of €350 was deducted from our dividends last year. In our circumstances, are we entitled to have the withholding tax refunded by the Inspector of Taxes?

Mr A.N., Dublin

You will have paid 20 per cent withholding tax on the Irish dividends you received last year - the basic rate of income tax. If your total income had put you into the higher tax bracket, you would have been faced with the prospect of paying more tax on your dividend.

In the interests of fairness then, you will not be surprised to hear that you are entitled to a refund where your total income falls below your income tax threshold, as in your case. You should apply to the Revenue for a refund.

Bogus accounts

I am looking to contact a man who, I understand, is offering assistance to people who invested money on the advice of various banks in what are now classified as "bogus accounts".

As far as I can remember, the person offering advice is a retired bank manager living in Cork.

P.D.T., Sligo

The man you are looking for is indeed a former bank official from Cork. He is Mr Conor O'Mahony, formerly an assistant bank manager with AIB, and you are right when you say he has been offering advice to people facing the wrath of the Revenue.

The only slight confusion is your reference to accounts now classified as 'bogus accounts'". These accounts - non-resident accounts opened by people resident in Ireland for the specific purpose of avoiding payment of Deposit Interest Retention Tax - were always bogus. The people opening them knew or should have known that they were in no way non-resident in the State - after all, most were paying income tax within this State or should have been.

The kernel of the case put forward by Mr O'Mahony is that, notwithstanding the fact that these were always bogus accounts, certain banks were habitually advising clients resident in Ireland to open non-resident accounts, presumably on the basis that what the taxman didn't know wouldn't hurt them. In this, they were presumably bolstered by the patchy record of the Revenue on enforcement at that time.

At the end of the day, people have an individual responsibility for their own tax affairs and Mr O'Mahony will be doing well to persuade the Revenue that any bank's incorrect advice should supersede this - even if any did breach their relationships with their customers by advising them to act in an illegal manner.

If you do wish to contact him, his number is 021 4547071.

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.