Dominic Coyleanswers your questions.
Sudden dive for Ryanair shares?
What has happened to the price of Ryanair shares? I noticed this week that it has dropped by almost 50 per cent, to around €6. Last week, it was trading above €12, yet I have read nothing about this in the newspapers.
JB, Dublin
It seems you have not been reading the information forwarded to you by the company. Back in December, the airline's shareholders approved an extraordinary general meeting motion for a share split. This entailed the company issuing two new shares for every one share previously held.
At the time, the company said only that the share split would take place in the first quarter of 2007. As you have discovered,this operation has now taken place and the value of each share is thus, logically, around half the level it would have been before the share split.
Equity fund tax
I hold an equity SSIA, which matures in April. It's with Cornmarket . . . a moderate risk plan that will pay at least 10 per cent compound.
My query is if I leave the plan in after paying the Government 23 per cent tax, what is the Revenue's position on any other gain from then?
JF, Dublin
As you guessed, the taxman is never done when it comes to taking a slice of your happiness. The Revenue will indeed take 23 per cent by way of an exit tax on any gain in your Special Savings Incentive Account when it matures in April.
Leaving your savings invested in the fund thereafter is certainly worth considering in light of recent pronouncements from a number of fund managers that they will charge exit penalties on people who withdraw their SSIA money from equity funds.
The Revenue's position is that any subsequent gain in your fund will also be liable to exit tax when you draw down your savings. This is charged at the standard rate of income tax (currently 20 per cent) plus three percentage points. In essence, this means any further gain would face a tax charge of 23 per cent - at least until the politicians deliver on all their pre-election promises to cut the basic rate of income tax.
Widow's pension
On the death of a spouse, does the surviving partner automatically qualify for a widow's/widower's pension? It was always my understanding that one did. However, recently a friend of mine who lost her husband some years ago informed me she is not in receipt of a widow's pension. Her late husband worked with the health board and paid his taxes and PRSI all his life.
Of course working in a semi-State body he would not have been paying the full PRSI. Would this have some bearing on her not receiving the widow's pension? What does the code KI stand for in PRSI? I would welcome your comments.
T O'B, email
My understanding is that, if a deceased spouse was in receipt of a State contributory pension, the remaining spouse would automatically receive the widow/er's contributory pension. Otherwise, I gather it is not automatic and would depend on the PRSI contributions of the surviving spouse. More significantly, the surviving spouse in this case would need to apply for the widow's pension, where eligible. The relevant form is WCP1 and is available from post offices or downloadable from the internet - www.citizensinformation.ie or www.welfare.ie
In terms of eligibility, one or other spouse must have made a minimum of 156 paid PRSI contributions. Of these, either:
39 contributions a year must have been paid either three or five years before the death of the spouse or before they reached the age of 66, or;
a yearly average of 24 contributions must have been paid from the date of entry to insurable employment to the time of death or pension.
The annual average of 24 contributions would leave your friend in receipt of the minimum widow's pension (currently €185.80 a week if she is under 66, or otherwise €200.30). For the maximum pension of €191.30 a week (or €209.30 if over 66), the annual average would need to be 48 contributions.
PRSI Class K1 refers to people whose income is not liable for social insurance contributions but who are still liable to pay the health levy. If their weekly pay is more than €480, they pay 2 per cent on any weekly income up to €1,925 and 2.5 per cent on income above this level.
K1 covers income from occupational pensions and from certain public office holders such as judges and state solicitors. It also includes the income of self-employed people and those with rental or investment income over the age of 66 whose earnings would previously have come under Class S.
• Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or e-mail 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.
