Posts Tagged ‘Investments’

Lights Camera Action……

August 7, 2014

film image

If like me you always had an interest in film but never quite made the cut in acting class, there is still an opportunity for you to get involved. Section 481 TCA 1997 film relief allows individuals to get tax relief for an investment in a qualifying film or television series. This investment relies on the successful completion of the film/television project.

Successful shows which have availed of this scheme include Penny Dreadful, Mattie, Tashi & The Widower to name but a few.

Film Relief is available, generally for high income individuals, who invest up to a maximum of €50,000. Individual investors can invest amounts exceeding €50,000, but only €50,000 relief is allowed in one tax year. Any amounts exceeding €50,000 can be carried forward to the proceeding tax years. Therefore it is generally recommended investing a maximum of €50,000 in any one year.

To get the tax benefit from film relief an investor would typically raise the €50,000 investment slot by part equity / part loan agreement. Based on the credit application being approved, the investor issues a cheque for €17,500 and the remaining €32,500 is financed by a loan, which is applied for through the film production company. The individual then subscribes to shares of €50,000 and Revenue will issue a Film 3 certificate to confirm the investors’ investment.

The investor then makes a claim to the Revenue Commissioners and receives tax relief of 41%, assuming they have enough income at the higher rate. Based on a €50,000 investment, the investor should receive a refund of €20,500 from Revenue.

PAYE investors should see this refund on their payslips before the end of the year in which they invest. Self-assessed investors will have to wait until they file their tax return before seeing their return.

The overall return for an investor will be €3,000 if they invest €50,000 in the scheme.

If you are interested in investing in film relief, please contact us on 021-4641400 or email info@quintas.ie.

Blog by Laura Simpson, Trainee Accountant, Quintas

Is there an endgame for the Euro??

January 26, 2012

Save the Euro?

Uncertainty over the future of Europe and the Euro has reached a dangerous phase.  Risk in Europe has become skewed due to lack of clear leadership and compounded by significant deleveraging in the private and public sector.  A strong policy response has been required for over 6 months now and as this necessary response continues to be put off markets have increased risk premium attached to practically all asset classes. 

Countries, corporates and individuals are being forced to accelerate deleveraging of their balance sheets.  Non-core assets are specifically suffering from extreme risk aversion.  Markets like nothing more than certainty and at the moment uncertainty abounds.  For banks (and the functioning of the financial system) this is leading to a damaging spiral of an accelerated sell off in assets in the midst of weak buying.  That private balance sheets need to be deleveraged is not in questions but in order to have any orderly market adjustment there needs to be strong buyers. 

The ECB has committed to supporting the financial system through increased lending.  But with both the banking and private sector deleveraging the appetite to circulate this influx of cash is significantly diminished.  The real issue lies on the balance sheet of the government sector which is now being forced to contract.  The recent agreement to finance the banking sector was augmented with a fiscal austerity plan that will weaken and contain government spending.  This will lead to the 3 sectors of economies (private, corporate and government) all embarking on deleveraging and contraction at exactly the same time.  This is not a recipe for recovery.

We expect the next 3 months to be the most crucial ever for the Euro zone and the entire future of the European project.  We also remain wary of the knock on effects around the world. 

Legal aspects of a Euro Breakup:

While the breakup (full or partial) of the Euro is not a done deal by any means we are encouraging investors to consider the fact that the probability of this outcome has increased and they should at least partially insure their portfolios against such an event.  While there is not a definitive answer to what happens in such an event, our research highlights the fact that it may come down to whether domestic (Irish) or international law applies to the individual assets in your portfolio.   As such investors should consider what law governs their assets.

by David O’Shea

David is Investment Director in Quintas Wealth Management

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Women: protect yourself from pension shortfalls

November 4, 2011

Nine out of ten women face poverty in retirement and the problem of low pension provision among the female half of the population is a cause for concern for the Pensions Board. The Central Statistics Office last year revealed that 56% of women are not covered by an occupational pension compared with 45% of men. So if men and women are treated equally in relation to pension provisions why are many women forced to survive on a fraction of their male counterparts’ pension?

Women on average earn less than men, are more likely to be working part-time, have fragmented career patterns and are also living longer than men, all of which leaves them particularly susceptible to poverty in later life.  Women almost exclusively carry the social responsibility for unpaid care work in families. Whether someone is in full-time or part-time employment has a significant impact on their funding for retirement due to the fact that someone in part-time employment will be less likely to be able to afford the same level of contributions than their full-time counterparts. In addition to this, 45% of all Irish women aged between 15 and 64 are currently not officially in the workforce and therefore have no official earnings. It is significantly harder for women to build up adequate contributions in both private and public systems. It is important for the modern independent woman to think about what standard of living she wants to enjoy in retirement.  Traditionally women over 65 relied solely on the state pension through the social welfare system.   This system defined many women as qualified adults deriving their pension rights through their husbands contribution record thus reinforcing women’s dependency on men as the primary earners.

90% of women experience a huge drop in income upon retirement and find themselves with considerably less money to live on which effects their quality of life as they no longer have the same spending power which can result in a loss of independence. The average woman retiring today at 60 has a life expectancy of a further 20-25 years which is a significant amount of time to enjoy in retirement. It takes a long time to save for retirement and the earlier a person starts to contribute to a pension the better!

by Anne O’Doherty 

Anne is a Senior Wealth Manager at Quintas 

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Gold – where will prices go?

October 14, 2011

The price of gold recently topped $1,900 a troy ounce before falling back again. While jewellery consistently remains the largest source of global demand, gold’s safe haven status continues to influence prices.

In order to do a “rich-cheap” analysis in terms of historical price levels, gold is often discounted to its “real” value using US inflation as a deflator. This way gold is trading near an all-time high. However this is not entirely appropriate as the US accounts for less than 10% of global gold demand. In China and India who account for over 50% of global demand, by discounting gold prices by nominal increases in wages in these countries, gold has remained more affordable. While the price of gold has increased, wages have also increased lessening the impact of higher prices. The general uptrend in gold prices over the past decade has more than any other factor been due to growth in Asia.

Since the onset of the financial crisis in 2007, western investors, who throughout the early to mid 2000s shunned gold, have returned through purchasing exchange traded funds, gold bars and coins. Central banks who were net sellers of gold over the same time period have also reversed that trend. While not the largest source of demand, both cases have put upward pressure on gold prices. Combined with high inflation in fast growing emerging economies and fears over the strength of the US dollar, these factors together may have elevated gold beyond its “fair” price, with investors in panic mode.

While our research suggests gold has the potential to increase due to growth in Asia and because of its safe haven status, it may be subject to sharp corrections. Gold may rebate if the European sovereign debt crisis is solved, if the US gets their own fiscal house in order or a slowdown in Asia. With this in mind gaining exposure to up or down movements in gold prices within a certain trading range may be an ideal way to play gold prices. Such a strategy can be replicated through the use of derivatives.

by James McCarthy,

James is an Investment Analyst in Quintas Wealth Management

 

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Quintas Economic Review (Autumn 2011)

October 6, 2011

James McCarthy

While there has been a well publicized emphasis on a smart economy in Ireland, exporting traditional goods are not to be overlooked. High enrolement levels at universities is not necessarily required for a country to be economically successful. Germany has far fewer graduates than France yet has a higher GDP per capita. Many countries leading the way out of current financial difficulties have been countries such as China and Germany who have a strong manufacturing base. Those in most trouble are countries such as the US, the UK and Ireland all of whom concentrated on building jobs in the services sector over the past decade and outsourced many low to high-end manufacturing jobs. In Ireland, with spiraling wage costs during the past decade, we became uncompetitive and lost large parts of our manufacturing capabilities, which we are now trying to recreate to drive an export led recovery.

In 2010 the value of Irish exports reached €162.7bn, the largest figure ever for Ireland. One of the largest sector increases was for medical and pharmaceutical supplies, which increased by €24.3bn, a 15 per cent rise on the year before. Overall, almost two-thirds of Irish exports went to the US.

While Ireland remains in deep economic turmoil, we are still exporting mainly to developed countries such as the US and the UK, rather than selling our goods and services to developing nations, where economies are growing rapidly. Irish exports to China still only account for 3% of total merchandise exports. However with continued growth in the Chinese economy there is potential to take this up to 7% of total exports by 2015.

Annual External Trade

Geographical Area Exports Imports
EU 42% 29%
USA 23% 14%
Rest of World 19% 25%
UK 15% 32%

Source: CSO 2010

There are three major industrial sectors driving Irish exports – Chemical & Pharmaceutical, Information Communication Technology (ICT) and Agri-Food & Drink.

1. The Chemical and Pharmaceutical Sector: Exporters in this sector continue to be among the strongest performers in the Irish economy which together account for nearly two-thirds of all exports. In 2010 chemicals accounted for €22.8 billion or 25% of manufacturing output, pharmaceuticals €30.0 billion or 33%, and medical devices €4.3 billion or 4.8%.  Growth in this sector has driven Ireland’s strong export performance during our current difficulties. Johnson & Johnson is Ireland’s top exporter, shipping €8.5 billion worth of goods last year.

2. The Information and Communication Technology (ICT) Sector: This sector covers both hardware and services companies.  While contributing 8.5% of manufacturing exports, the ICT sector has reduced in importance over previous years, with exports falling by 36% to €7.6 billion in 2010. Like the Chemical and Pharmaceutical sector, the top exporting companies in this sector are non Irish companies and most are working in computer software and services rather than hardware manufacturing.  Microsoft is the second largest exporter in Ireland with exports of €8 billion in 2010, with Google being the third largest.

3. The Food and Drink Sector:  This sector has long been the traditional backbone of Irish exports. In contrast to the chemical, pharmaceutical and ICT sectors, Irish owned companies are more dominant than foreign multinationals, with companies such as Kerry Group and Glanbia being well known and established players. Food and drink makes up 14 per cent of all Irish exports. Because of the highly labour intensive nature of the sector it remains a vital part of the Irish economy, currently employing over 43,000 people. Importantly, employment in the sector has a wide regional spread, providing jobs not only in urban centres but also in rural areas.

The largest indigenous food and drink exporter is Kerry Group followed by the Swiss-based Aryzta, the Irish Dairy Board Co-op and Glanbia. Prospects for the sector remain positive, helped by strong global demand for exports expected to grow by 40% over the next decade.  According to Bord Bia’s food industry survey (December 2010), Irish food and drink manufacturers were more optimistic and showed a more positive outlook for 2011, which is reflected in the increase in exports so far this year.

The Future

With the current economic problems facing Ireland we now realise the significance of having a well diversified economy. As Ireland competes in the global marketplace for a limited number of jobs, we had little control to hold onto our manufacturing base due to decisions by previous governments. However in an increasingly volatile world, where possible, government policy should be encouraging and supporting indigenous Irish firms. Globalization has provided companies with opportunities to outsource and lower their costs by relocating to low tax countries or countries where labour costs are lower.Ireland has traditionally been a large benefactor of this. With current economic difficulties in many countries, protectionism is increasingly talked about as a solution to problems and in some ways is pursued either directly or indirectly, particularly through currency depreciation. Recently, Intel co-founder Andy Grove, when talking about US outsourcing of manufacturing jobs asked “…what kind of a society are we going to have if it consists of highly paid people doing high-value-added work – – and masses of unemployed?”  

by James McCarthy,

James is an Investment Analyst in Quintas Wealth Management

This article was included in our Autumn 2011 quarterly newsletter.

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Investing on Certainties

April 28, 2011

Investors should turn investment losses to their advantage by choosing the optimal tax structure to allow these losses offset against current and future profits.  Choosing the most efficient tax treatment is fundamental to a sound investment strategy.

One of the most used (and abused) of investment declarations is that “90% of investing results in losses”.  It is an oft used statement to warn investors of the risks and potential losses of investing.  While it is misleading as a statistic i.e. it doesn’t tell us the amount of money made from the 10% of investments or the amount of money lost by 90% of investments, it does point to one undeniable fact – all investors, at some stage, will lose money from investing.

A more common statement is that “The only certainties in life are death and taxes”.   Now as a statistic this is much more reliable.  For investors the world over know that if they make investment returns they will pay taxes.

Put together, what both statements mean is that you will make losses on investments and that you will pay taxes on profits.  By combining these certainties of investment losses and taxes investors can create an investment strategy that will result in improved returns.

Any investment strategy begins with the development of a good idea which relates to current economic and market conditions.  But a good idea constitutes only the first part of the investment strategy.  The far more important element is risk control.  Risk control means employing an approach which minimises losses.  Good ideas might allow us to make more gains than losses, but it is risk control which ensures we maximise the investment gains available.

If we know that when it comes to investing, we will lose money some of the time and will pay tax all of the times we make profit, then we should look at some way to minimise the taxes we pay.  Put simply, we must make tax consideration a key part of our investment strategy.

We can do this by choosing the most appropriate and tax efficient vehicle when making investment decisions.  In Ireland we are faced with different tax treatments for different investments.  Consider the major categories of tax facing an Irish investor;

Deposit Interest Retention Tax (DIRT): This is tax levied on deposit and deposit based investments.  It is currently levied at 27%.  Bank deposits and most tracker bonds are liable for DIRT.

Income Tax: This is tax levied on any dividend, coupon or interim payment made during the lifetime of an investment.  It is currently levied at investors’ income tax rate (20% or 41%).  Dividends from shares and coupons from bonds are liable for Income Tax.

Exit Tax: This is tax levied on profits made on saving and most fund investments.  It is currently levied at 30%.  Life Company funds and many saving products are liable for Exit Tax.

Capital Gains Tax (CGT): This is tax levied on capital gains made on investments, usually payable on disposal of an asset.  It is currently levied at 25%.  Sales of shares, bonds and property are liable for CGT.

The one factor which differentiates these tax treatments is that losses from investments which are liable for CGT, can be offset against any profits from any other investment liable for CGT.  In addition these losses can be carried forward indefinitely.  So for example a CGT loss on AIB shares realised in 2006 can offset against a capital gain realised on a property disposal in 2010.   This can significantly improve the net return to investors.

Losses made on investments liable for DIRT or Exit Tax are not allowable against gains made on investments with the same tax consideration.  Once losses are realised there is no further recourse for investors.

What this also means for individuals and companies is that they should consider capital losses already incurred and how they may be used to offset tax on future gains.  Many companies with capital losses might be advised to consider an investment liable for CGT against which they can offset previous losses rather than simply placing money on deposit which is liable for DIRT and allows no such offset.

A sound investment strategy should result in investor returns and efficient tax management can help improve these returns.  Making losses is not a rare event, in fact like death and taxes we can say with certainty that all investors at some stage will suffer losses.  This means it is something we can and should plan for by choosing investments which allows for tax offset.  Once you have generated that good idea, don’t waste it by choosing an inefficient investment vehicle.  Maximise your investment returns by making tax consideration part of your investment strategy.

Regards

David O’Shea

David is Investment Director at Quintas.

High Oil Prices – The Winners, Losers and Cross Currents.

April 20, 2011

Rising Oil Prices

Oil has risen more than 50% over the last 6 months.  While volatility in the Middle East has been making headlines the most interesting aspect has been the fact that it has been the strength in the global recovery which explains more than 80% of this increase.  This is borne out by the fact that nearly 50% is produced by a combination of Russia, Saudi Arabia, US, Iran, China, Canada, and Mexico.  Libyaproduces 2% of global oil.

One of the other factors driving Oil price, at least in the short term, has been increased speculative activity.  Speculative positioning and trading volumes are at all time highs.  There has been a significant increase in buying of deep out-of-the money call options, which bet on more price surges.  While this suggests the market is positioning for a move higher in Oil prices it also warns of potential excessive moves lower should these positions be liquidated.

The impact of higher Oil will impact a variety of asset classes both directly and through its impact on global growth and the subsequent policy repose from governments and central bankers.

 While Oil prices increases generally have to be persistent to impact growth, there is no doubt that higher Oil price against a backdrop of a fragile global economy and higher commodity price inflation will only result in a drag on global growth.  The persistence of Oil prices above $110/bl could shave up to 0.5%-1% off current estimates of global growth.  Oil at a persistent $150/bl could impact global growth as much as 2%. 

Importantly there are differences between the potential impact of higher oil prices on developed versus developing world, with the former likely to suffer more than the latter.  While monetary policy is broadly accommodative across the globe it is significantly more accommodative in the developing world.    With accommodative monetary policy offering a cushion against rising Oil price, emerging markets are more likely to absorb any future oil price shock.  Historically the impact of rising Oil prices on the developed world has been about twice the impact on EM.

Over the past 30 years there has been little pass-through from higher Oil prices to Core inflation (i.e. inflation excluding food and energy) but the current economic fragility points to a more complex relationship.  The extent of food and energy price increases over the past year points to a potential breakdown of this historical relationship, with the inflation-growth dynamic complicating policy reaction for central bankers.

What this means is that there could be some reversal in the current trend towards tighter monetary policy.  Specifically, there could be divergence in the approach of countries.  The Federal Reserve in the US is likely to keep monetary policy more accommodative erring on the side of growth over inflation whereas the ECB is likely to continue to focus on inflation over growth.  Resulting interest rate differentials could see out performance of the Euro versus the US Dollar.  The US Dollar is also likely to suffer from the overdependence of the US relative to Europeon oil.  When Oil spiked to $140/bl in 2007 the Euro gained more than 10% again the US Dollar.

Europe is potentially more at risk from rising Natural Gas prices which it heavily imports and relies on for energy production.  Natural Gas prices have lagged Oil price increase over the past 6 months but we could witness a catch up if Oil prices remain at current levels.

While Gold has a strong correlation to Oil prices around times of geopolitical risk it is perhaps industrial metals that offer a more interesting trading opportunity.  Aluminium production in particular has a strong relationship with Oil prices as over 30% of its production costs are energy related.  Persistent Oil prices above $100/bl will put upward pressure on Aluminium and other energy intensive metals.

Equity markets are likely to suffer in the face of higher Oil prices.  One of the more interesting trends since 2008 has been the positive correlation of Equity markets to Oil prices.   Equity investors became more sanguine about Oil prices as global equity rallied in line with rising Oil prices.  This persistence positive correlation has been striking.  Historically however, this relationship does not last.  And in the past month this correlation has broken down and become negative for the first time in 2 years suggesting high Oil prices will cause the recent stock market rally to falter. 

Suggested strategy plays for higher Oil prices: Relative value plays favouring Emerging Markets over Developed Markets; Long Industrial Metals; Long EURUSD; Short Equity.

Regards

David O’Shea

David is Investment Director at Quintas.

Believe in Yourself

February 23, 2011

Do You Prefer to Believe in the Positive or the Negative?

Positive Thinking for SME's and Individual's

Do You Prefer to Believe in the Positive or the Negative

Having read my fair share of articles over the last 24 months about the state of the nation I feel totally frustrated that as a nation we would prefer to believe that we are a spent force, on the scrap heap, failures and a whole host of other terms that I care not to repeat. I feel that some are at a point of finding comfort in the negative as if that is going to change anything. Enough…

I have a number of friends\clients who are non-Irish and who have set up business here over the last 10 years because of our can do belief. They came here and were mesmerised by us. They loved the idea that we believed that anything was possible. I’m not talking about construction or construction related business’s but IT Companies, Online Retail, Product, Export, Transport etc. The comment was made to me last month that all the self belief has gone and now the hope with it.

We can all understand why this has happened, but we need to step back and re-analyse this. Yes the Bank Bailout has put massive pressure on us as taxpayers especially if the tax take remains at €35bnish, the IMF coming in is upsetting and the political system needs a major overhaul. The worry about mortgage rates is just the latest thing that is worrying us all. But look at our business sector.

In Quintas, we would have a large number of Clients (approx 2000). Everyone of those clients have found the last 3 years difficult. About 100 of those clients have closed their doors but the rest are still there. Some have down sized, some have battled hard to maintained the status quo and others have actually grown. How have clients maintained the status quo or grown? Are we not in the worst recession ever to hit these shores, are we not answering to some one else’s tune etc etc

Well the answer is simple. We have a very creative, determined, vocal and hard working private sector. A sector that has cut their cloth to measure. A sector that is looking at foreign markets for raw materials and also looking at foreign markets to export to. There is a huge belief that over the coming 24 months that the private sector will convert that hunger into real growth.  I’m not saying that the private sector is not hurting. It is hurting. Job Losses and Job creation will be neutral over the next 12 months. Cash and Cash flow continues to be difficult. Profits may be coming back and just because a company or business may be making profit does not mean that cash flow is improving.

But we are still here, we were busy putting in longer hours getting fit and lean when others were just pointing fingers. We have put in new structures, controls and policies. We were also studying what was going on in foreign markets and educating ourselves. We are ready.

As a nation we are well educated. Our 3rd level institutions are turning out courses tailored to what is happening and what is needed in the market place. There are so many markets opening up to us it’s incredible. We have to focus on the job in hand. More and more people are coming to the realisation that we can only control what we can control. We’ve got to do it for our selves.

So yes there is light at the end of the tunnel. Ideas and Job creation is the only way. Forget about restructuring bailouts, taking issue with our European Neighbours and the usual garbage the politicians go on about. We have to do it for ourselves, support each other, buy Irish and believe in ourselves again.

William Hogan is a Parner in Quintas

Quintas New Investment Products 2011

January 26, 2011

 

Following on from a successful 2010 Quintas Wealth Management have launched 2 new investment products for Quarter 1 2011

The BRIC Outperformer (Tranche II) eliminates market direction by constructing a relative value strategy where Emerging Markets are expected to outperform the S&P 500 (benchmark for the developed world).  There is strong capital protection with potential early redemptions every 6 months with a 7% (or 14%p.a.) return available.

The Agri-Protector offers clients a 97% capital guaranteed exposure to the soft commodities of Corn, Cotton and Sugar.  There are potential early redemptions every year with a 10% p.a. return available.

Our recent investment successes have provided clients with returns of up to 22% for up to a 12 month investment. This represents a fantastic return for clients, particularly in this difficult environment. Quintas Wealth Management is Ireland’s only financial services firm designing and creating short dated niche products, combining optimal structuring and producing these sort of consistent returns for clients

For brochures on the above and for more detailed information Please click here

Regards

Mark Ryan

Mark is a Director of Quintas and heads up the Business Centre