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  1. #1
    Outlaw103 Outlaw103 is offline

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    The mortgage of Patrick Kennedy

    Article on Independent.ie this morning giving detail oh the new BOI chairman really shines a light on the life styles of a certain section of our community.

    According to the article Patrick Kennedy had a mortgage of 2,823,000 with BOI and between the period made average monthly mortgage payments of

    1,416 in 2016 and 2017,
    1,500 in 2015
    1,833 in 2014.

    These were interest only payment.

    During 2013 he had made a payment of 1,135,000 to reduce his mortgage from 3,958,000 to the 2,823,000.

    The year prior he had payments of 253,000 ,reducing the amount owed on his mortgage from 4,211,000 to 3,958,000.


    First of its shocking that someone who can afford to live in a property valued in the multi millions and can afford to make an annual payment of excess 1,000,000 is making mortgage payments that would be expected of an average income household living in a 3 bed house in an estate in the suburbs.

    However, I'm wondering how all of this is treated by revenue. According to the article the repayments on such a loan amount over the period at the advertised rate would be 12,208.55 per month. This represents quiet a difference and I was wondering if he would have been obliged to pay tax on the benefit that he is receiving.

    I understand that preferential loan arrangement between an employee and employer is taxable under Section 122 TCA 1997 . He is not yet an employee so would not have been covered by that section. Although, I would expect that there was an advance arrangement that he would assume the role and that there was some sort of agreement in place relating to his employment which predates his assuming the role and that the preferential rate was active during that period.

    Does he, or did he, own any shares during the relevant period and could the loan arrangement be considered a distribution of some kind on which DWT and Income tax obligations would have existed? Surely such an arrangement would be captured under Section 130 TCA if it was taking place.

    Finally, what about Gift Tax? If it is not a emolument or a distribution would the difference between what a person would normally pay on the loan and what he was paying not amount to a gift to him from the bank?

    Does anyone know how arrangements like these are treated? Does the fact that there would have been an employment agreement in place during the period of apparent preferential treatment but before employment begins play a role, or would that be determined by when the agreement came in to place and if loan arrangements adjusted during that period.


    https://www.independent.ie/business/...-36911457.html
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  2. #2
    Catalpast Catalpast is offline
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    I am baffled how any individual in hock to a Banking Institution

    - could be appointed to run it...

    Does not the Principle of 'Conflict of Interest' comes into play here?

    While I do not want to cast a shadow on the personal integrity of the man

    - surely this is most unwise?
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  3. #3
    Man or Mouse Man or Mouse is offline

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    Quote Originally Posted by Catalpast View Post
    I am baffled how any individual in hock to a Banking Institution

    - could be appointed to run it...

    Does not the Principle of 'Conflict of Interest' comes into play here?

    While I do not want to cast a shadow on the personal integrity of the man

    - surely this is most unwise?
    Not at all. He has shown himself to be a worthy insider, therefore exactly the kind of man we need in this bank.
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  4. #4
    Emily Davison Emily Davison is offline

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    Quote Originally Posted by Catalpast View Post
    I am baffled how any individual in hock to a Banking Institution

    - could be appointed to run it...

    Does not the Principle of 'Conflict of Interest' comes into play here?

    While I do not want to cast a shadow on the personal integrity of the man

    - surely this is most unwise?
    So nobody with a mortgage can work in a bank?
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  5. #5
    Analyzer Analyzer is offline
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    [email protected] of Ireland. And high costs in high places. They are at it again. Actually, they never really stopped.

    BoI are a deeply schitzophrenic organization. With a rugger-bugger-nepotistic-show-off element, and a more cautious precise element fighting for control of the organization.

    In the last fifteen years, the rugger-bugger element have been in control. And they led the bank (they still call themselves "the bank") to insolvency.

    They have not learned anything. And the information in the OP indicates as much.

    They will however lecture the rest of us on economic booms and spending.

    Enuph Sedd.
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  6. #6
    Emily Davison Emily Davison is offline

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    Outlaw103 do not bank staff who get preferential interest rates have to pay benefit in kind. In the past part of the perk of being a bank employee was you received a better interest rate than the customers. But revenue decided that it would be subject to benefit in kind.

    As regards this particular mortgage, we do not have the full facts on it. There is quite clearly some arrangement in place and it seems he was had to pay back a certain amount of capital on a certain date. Unless we get the full details, it's impossible to figure this out. And incidentally there is nothing untowed with having special arrangements. As long as it's legal and above board. The very rich have always been able to negotiate such arrangements. Because unlike us mere mortals, the banks court their business.
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  7. #7
    Catalpast Catalpast is offline
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    Quote Originally Posted by Emily Davison View Post
    So nobody with a mortgage can work in a bank?
    There is a sizeable differential in scale between a bank clerk with a mortgage on a semi D

    - and the size of his mortgage and the position he will hold
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  8. #8
    Sync Sync is offline
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    He's front-loaded payment. That's all. He's massively overpaying on the terms of the mortgage that we know of. Lots of people do that. You pay your bonus or maturing savings schemes in. Better use that than have the cash floating around.

    You're incorrectly focusing on the amount paid off a month vs "is the loan being serviced". I don't think that's necessarily your fault, because they've written the article to confuse you.

    The article doesn't say how much the mortgage is, or the value of the house, or when he took it out. So all you know for sure is that at the beginning of 2013 he had a mortgage of 4.2 million and at the end of 2017, he'd paid that down to 2.8 million.

    So over 4 years (With the proviso that we don't know the details above), he's repaid 30% of the known mortgage amount. To use your monthly focus: He's actually repaid just under 30k for every month of those 4 years. He just did a lot of it in one go.

    Every bank would fall over themselves for such a customer.
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  9. #9
    Outlaw103 Outlaw103 is offline

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    Quote Originally Posted by Emily Davison View Post
    Outlaw103 do not bank staff who get preferential interest rates have to pay benefit in kind. In the past part of the perk of being a bank employee was you received a better interest rate than the customers. But revenue decided that it would be subject to benefit in kind.

    As regards this particular mortgage, we do not have the full facts on it. There is quite clearly some arrangement in place and it seems he was had to pay back a certain amount of capital on a certain date. Unless we get the full details, it's impossible to figure this out. And incidentally there is nothing untowed with having special arrangements. As long as it's legal and above board. The very rich have always been able to negotiate such arrangements. Because unlike us mere mortals, the banks court their business.
    Yes the BIK on a preferential loan but the period relates to a period before he becomes officially employed. Although I was wondering if a pre employment agreement to enter into employment would impact on the period the preferential loan section would apply.

    If a family member gave you an interest free loan it would be considered a taxable gift. There is also some opinion that a guarantee provided by your parents on a loan, home loans etc, may be a taxable gift.

    I understand that there is likely an arrangement in place I'm just wondering how such an arrangement would be dealt with in terms of tax.

    I assume that there was clearance for the arrangement from revenue, is there a record of those arrangements and the ruling given by revenue available somewhere?

    He must be receiving some benefit under the arrangement and I'm wondering how that benefit is dealt with by revenue.

    Its hard to do when we don't know how the arrangement but if the benefit being received is not caught as a BIK, Distribution or Gift then I'd like to know how if possible.
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  10. #10
    Outlaw103 Outlaw103 is offline

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    Quote Originally Posted by Sync View Post
    He's front-loaded payment. That's all. He's massively overpaying on the terms of the mortgage that we know of.

    You're incorrectly focusing on the amount paid off a month vs "is the loan being serviced". I don't think that's necessarily your fault, because they've written the article to confuse you.

    The article doesn't say how much the mortgage is, or the value of the house, or when he took it out. So all you know for sure is that at the beginning of 2013 he had a mortgage of 4.2 million and at the end of 2017, he'd paid that down to 2.8 million.

    So over 4 years (With the proviso that we don't know the details above), he's repaid 30% of the known mortgage amount.

    Every bank would fall over themselves for such a customer.
    Yes, that is a good point, it would have to be a front loaded payment to eliminate the benefit.

    The payment in 2013 was €1,135,000.

    The payments made in 2012, was €253,000

    If you add the €1,135,000 to payments made over the relevant years of €77,000 and divide it by the number of years then it works out at approx €250,000 which would then make them consistent with what was being paid in 2012.

    If no benefit was received then there is nothing liable to tax.
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