Q: I invested in bitcoin two years ago on a bit of a whim, but have recently started to make some money trading on my investment. I'm looking to liquidate some of my stock for the first time and convert it to euro. Will there be tax due on my profit, and at what rate?
A: The short answer is yes. While there is a lot less discussion in official circles regarding tax obligations for cryptocurrency, the reality is that profit or income from this source is subject to the same tax regime as any other form of income or gain. Self-assessment on any profits from the sale or liquidation of your cryptocurrency is unavoidable, and every single gain you make from a cryptocurrency disposal must be declared to Revenue, according to the commercial director of Taxback.com Eileen Devereux.
An investment in cryptocurrency is looked upon by Revenue in the same manner that an investment in any other currency, stock or share would be. Thus, any profits accumulated through the disposal (selling, gifting or exchanging) of your cryptocurrency will need to be declared under capital gains tax (CGT). The gain or profit (the difference between the price you paid for the asset and the price you sold it for) is considered taxable income for CGT purposes, Ms Devereux stressed.
The current standard rate for capital gains is 33pc. The good news is that the first €1,270 of your cumulative annual gains (after deducting expenses and losses from other cryptocurrency investments) are exempt from tax. However, any profit that you make above this figure will be taxed at the standard rate of 33pc.
You will also need to file a tax return in respect of the disposals made by the required deadline. In terms of filing a return, Revenue will require a lot of detail including a description of the asset, sales proceeds and the cost of the acquisition. It is important to keep a detailed log of the relevant dates and values for each investment and disposal you make. The more detail you can keep, the better, as these types of investment portfolios can get complicated very quickly.
Q: I'm a 23-year-old female college student in UCC, Cork. I have had car insurance in my own name for the last 18 months since I got my full licence and will have a full year's no-claims bonus this month. My premium this first year was over €1,500 and I have barely managed to hang on to the car it as it costs so much. I am not sure I am getting the best value. I have done all I can to try reduce my premium, including having my dad as a named driver, and am worried I will have to give up my car if I have to pay a similar premium this year.
A: One of the main issues facing young drivers is lack of competition in the first-time market place. A driver with a full no-claims bonus could have 15-plus insurers looking to quote for their business, whereas a first-time driver might only have five insurers looking to quote, according to the managing director of broker Coverinaclick.ie Jonathan Hehir. He says he has seen young drivers secure big reductions on their premiums from specialist insurers when they complete their three driving milestones - taking 12 professional lessons, getting a full licence and earning a one-year no claims bonus, all of which you have, or will soon have. There are smaller, niche insurers out there doing favourable rates, but many of these are only available through a broker.
Q: I am looking to make a change in my commute to work and am thinking about getting a bike. Some friends got set up through the bike-to-work scheme. I wonder will I end up paying more for the bike through instalments in work, than if I just went into a shop and paid outright?
A: The point of the bike-to-work scheme is as a tax relief, and therefore it is designed to save you money on the cost of a bike and associated safety equipment.
Under the scheme, your employer pays for a bicycle and bicycle equipment to be used primarily for the purpose of commuting to and from your workplace.
You then pay back through your salary in an arrangement of up to 12 months, known as a salary sacrifice. Under the scheme, you don't pay income tax, PRSI or universal social charge on the price of the bicycle and/or safety equipment up to the value of €1,000. You will actually save up to 52pc of the retail cost, according to the commercial director of Taxback.com, Eileen Devereux.
But the real saving is the tax that would have been paid on this income - making it very worthwhile for any employee.