Tax liability on Joint Account

TomMc

Mother and (adult) son invest in a 5 year investment bond with an Irish bank/building society. The funds are obtained from one party namely the mother, but both names are listed as investors, so effectively like joint names on a bank account.

Mother passes away and so on presentation of a death cert, financial institution amends name to that of the surviving party, namely the son. As the bond has some time still to run it is left as it is. Not part of a will/estate, probate etc.

So when it matures, will there be any capital gains tax, capital acquisitions tax, inheritance tax due when the bond is cashed. Apart from DIRT or any exit tax deducted by the financial institution at source.

It is under the 30k limit for clearance by revenue, although I think this figure may have increased to 50k in more recent times.

nompere

There's a gift equal to half the money deposited when the account was opened. There's an inheritance of half the value of the account at the time of the mother's death.

The absence of formalities doesn't change that.

DIRT will satisfy any income tax at the time of maturity. There might be a small liability to levies. Most investment bonds don't give rise to CGT liabilities. Depending on the value of any other gifts or inheritances there might be a CAT liability.

My recollection is if probate is required for anything else then the papers to be filed ask about assets held jointly and previous gifts. So details of this account will have to be provided to Revenue anyway.

TomMc

Thanks Nompere,

One last thing. Would I be right in saying the tax-free threshold for Gift Tax is circa 400k over a persons lifetime. Granted the exact threshold figures will have changed slightly down the years.

I presume Mother gifting to her Son is Group A. Even though they state "child", do they mean "son or daughter". In otherwords an adult not a minor.

http://www.revenue.ie/en/tax/cat/leaflets/cat1.html

So a 25k sum invested by one party (mother) is well within the tax-free threshold for the non-contributor (son) as it's the persons first gift received (12.5k) in their lifetime. Where gift tax is concerned when the account was opened in 2005.

nompere

"Child" means son or daughter. It isn't limited to minors.

CAT was last overhauled in 1999, and only gifts/inheritances received after 5 December 1991 are aggregable.

The parent/child threshold was set at Ir£300,000 in 1999 and it was revised upwards every year until 7 April 2009 when it was reduced by about 20% to €434,000. It was reduced again in 2010 to €414,799.