Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I thank Deputy Costello for raising this matter.

My understanding of the background to this issue is that, following the sale of its Canadian business, the UK company Standard Life plc offered its shareholders the option of having the return of value payments due to them treated as income or capital. Treatment as income was decided by the company as the default position in the absence of shareholders choosing the capital option within a specified period, which elapsed some time ago.

It seems that the chosen options posted by quite a number of Irish shareholders in the company were delayed beyond the deadline and that the form in which they then received their payment was not the most tax efficient from their perspective. The Revenue Commissioners have informed me that, 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.

Comparisons have been made between this case and one from last year relating to Vodafone shareholders. In last year's Finance Act, I included provisions allowing for a measure of tax relief to the many thousands of Irish shareholders with small shareholdings 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 many of the Vodafone shareholders arose originally from their investment in eircom from which they continued to carry capital losses. It was in this context that I felt it appropriate to protect these small shareholders in last year's Finance Act from additional cost or losses through a tax liability.

The particular background to the Vodafone case is not a feature of the Standard Life return of value case. Furthermore, it is important to note that the fact that notifications of the options made by some of the Vodafone shareholders were also delayed in the post beyond the deadline date in that case or were not dealt with by the company as shareholders would have wished were not factors in my decision to provide the relief.

Having said that, though, I have undertaken to give consideration to the views and concerns expressed in respect of the affected shareholders in Standard Life in the course of my preparations for the forthcoming Finance Bill, and I will do so. The matter is already receiving attention in this regard.

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