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Gift/Inheritance Tax

  • 21-07-2014 9:09pm
    #1
    antodeco
    Registered Users, Subscribers, Registered Users 2 Posts: 13,585 ✭✭✭✭


    Hi all,
    Just a quick query. Father received inheritance from his passed father. My father in turn gives me some of that inherited money. Does this now become gift tax band B, as in grandparent to me, as the money was given on within 3 years of receiving? Or does it stay as Band A, parent to child?

    Thanks


Comments

  • #2
    Mr. Incognito
    Registered Users, Registered Users 2 Posts: 9,798 ✭✭✭Mr. Incognito


    Section 8 of the CAT Act applies. It would become a gift from the grandparent to the grandchild utilising threshold B if your father was to gift it to you within three years.


  • #3
    barneystinson
    Registered Users, Registered Users 2 Posts: 4,685 ✭✭✭barneystinson


    S8 only applies to gifts. If the money is inherited then there's no gift-splitting issue.


  • #4
    antodeco
    Registered Users, Subscribers, Registered Users 2 Posts: 13,585 ✭✭✭✭antodeco


    So my father inherited the money, and in turn gifting me part of it. Does that mean it's Group B?


  • #5
    barneystinson
    Registered Users, Registered Users 2 Posts: 4,685 ✭✭✭barneystinson


    antodeco wrote: »
    So my father inherited the money, and in turn gifting me part of it. Does that mean it's Group B?

    No it's group A. Gift splitting applies where your grandad wants to give you say 50k, but because it would trigger a CAT liability he GIFTS it to your Dad, who then GIFTS it to you. That's what gift splitting is, 2 successive gifts. In your case, the first benefit is an inheritance, so the subsequent gift can't trigger an issue under S.8.


  • #6
    antodeco
    Registered Users, Subscribers, Registered Users 2 Posts: 13,585 ✭✭✭✭antodeco


    Thanks for that. I wanted to "use up" the group B threshold before eating into the group A limits. Appreciate you clarifying that for me.


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  • #7
    myshirt
    Registered Users, Registered Users 2 Posts: 5,245 ✭✭✭myshirt


    Note also that on receipt of the gift, you will have to aggregate the amount of gifts received post 1992.

    In essence, if you ever received a large gift before that wasn't taxable at the time, it may now be as the threshold isn't as large anymore.


  • #8
    kitchenkid
    Registered Users Posts: 78 ✭✭kitchenkid


    Good point on the decrease in thresholds - one to watch out for.


  • #9
    nompere
    Registered Users, Registered Users 2 Posts: 1,678 ✭✭✭nompere


    kitchenkid wrote: »
    Good point on the decrease in thresholds - one to watch out for.

    Except that it just isn't true.

    This is from Revenue.ie:

    Calculation in respect of the latest of a series of benefits taken since 1991:

    a.Aggregate all prior benefits within the same group threshold as the current benefit with the current benefit and calculate the tax on the total.

    b.Aggregate all prior benefits within the same group threshold as the current benefits, excluding the current benefit and calculate the tax on the total.

    c.Subtract tax at (2) from tax a (1) - this gives tax referable to the current benefit.



    In effect the notional tax on previous gifts/inheritances is calculated at today's rates and thresholds, so that only the current gift gets taxed.


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