Back in the day, when Norwich Union was handed over, a sum of 352 Aviva shares were bestowed upon us. In those times, we received an annual dividend and withholding tax certificate. However, this practice ended when the process was moved online. So, we no longer receive such certificates.
Per year, two dividends totalling around €100 are transferred into my account. The confusion lies in ascertaining if a tax has been deducted from these dividends and whether the untaxed €100 needs to be declared to the taxation authorities.
Coming to May 2022, during a consolidation of shares, we benefitted by a few hundred euros as well as a new share certificate representing 267 shares. The matter of taxation in this instance is also shrouded in ambiguity. I am a septuagenarian without the ability to use a computer, which poses a barrier in understanding the ins and outs of these processes. If you could elucidate, I would be grateful.
Ms A.S.
It’s an oft-posited assumption that everyone has access to the internet, while another widespread and rather flawed assumption is that anyone who is online can comfortably deal with digital dealings involving their personal finance matters and any obligations thereof. This blanket supposition disregards the fact that many people, including some elderly, aren’t comfortable engaging in online financial transactions, an illustrative case being my acquaintances in their 60s.
You were amongst the 160,000 Irish clientele and personnel of Norwich Union, currently Aviva, who were bequeathed shares when the company decided to go public on the stock market back in 1997. A good 27 years have passed since the memorable summer when that occurred.
Despite your aversion towards technology, notably computers, you’ve remained abreast with the happenings at the company and the fluctuations in its shares with the passage of time.
Indeed, Norwich Union morphed into Aviva in June 2009, followed by the share consolidation and capital return endeavour in 2022. As a consequence of the latter, for every 352 Aviva shares you previously possessed, you received slightly less than €1.20 each.
It’s integral to understand that dividends are classified as income and hence ought to be reported in your annual tax return to the Revenue Commissioners.
Your stocks underwent a consolidation process where all shareholders retained a quantity of shares that totalled to 76% of their former holdings. In your particular scenario, your total of 352 shares reduced to 267 shares, and you received a small remuneration for the leftover fraction of a stock.
What impact does this have on your tax situation?
The money you obtained from Aviva via the return of capital most likely fell under the threshold for capital gains tax. For you specifically, the involved sum – slightly over €420 – would have been substantially beneath the permissible €1,270 capital gain in a tax year sans tax paying.
As for dividends, there are two crucial points to be aware of. Firstly, dividends are indeed viewed as income and must be included in your yearly tax return to the Revenue Commissioners. As a recipient of dividends, even if you’re normally a PAYE employee, you must file a tax return as dividends aren’t taxed via PAYE yet are still taxable. The onus of informing the Revenue concerning the liability and fulfilling its payment lies with you.
Secondly, the regulations surrounding dividend withholding tax have seen modifications. Upon your initial receipt of these stocks, the UK did enforce dividend withholding tax, and a complex procedure of claiming some of it back and disbursing the remainder against any tax responsibilities in Ireland was in place.
However, this witnessed a change in 2016 when the UK abolished the dividend withholding tax. Any dividends collected after April 6th of the same year (beginning of UK’s 2016/17 tax year) would have been received by you devoid of tax deductions.
While the Revenue is eager to handle all its business through online means, it is nonetheless your choice to opt otherwise.
It appears as though your yearly dividend income from Aviva hovers around €100. Presuming your income satisfies the criteria for income tax, you need to pay Revenue between €20.50 and €48 in income tax and universal social charge on these dividends. According to your letter, you might owe Revenue for past dividends income.
Even though this amount seems negligible from Revenue’s standpoint, for your personal reassurance, it might be worthwhile to communicate with them.
Given the current trend, Revenue prefers to handle all of its dealings electronically. However, due to your circumstance of not having a computer, there are alternative methods available.
For your situation, you are required to complete a Form 12S—a concise, simplified variant of the Form 12 utilised by PAYE employees with supplementary income. Acquiring this form should be straightforward from any taxation office, or by post from the Officer of the Collector General at Collector General’s Division, Revenue Commissioners, Sarsfield House, Francis Street, Limerick, V94 R972.
[Procedure to recover lost share certificates my departed father held]
You will require a separate form for each year in which you owe tax. The intricacies of this form, usually quite self-explanatory, require you to document your Aviva dividend income under the ‘gross amount in euro of other foreign income’ section on the 7th page of the colour-themed form, recognisable through its blue boxes.
At the same occasion, you can claim relief on any health expenditure owed to you during those exact Pperiods. However, relief claims are only valid for four years prior to the present one— that is, from 2020 to 2023.
For further queries, please contact Dominic Coyle, Q&A at The Irish Times, 24-28 Tara Street Dublin 2, or via email at dominic.coyle@irishtimes.com. Note that this column adheres to assist readers and is not a substitute for expert consultation.
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