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When there's no obligation to make a CAT return...

  • 05-05-2012 9:21pm
    #1
    WexTK
    Closed Accounts Posts: 153 ✭✭


    Hi guys,
    as Revenue say, there's no obligation to make a CAT return when gifts received are not within the respective 80% CAT tax free threshold. Now supposing in the future such a threshold gets reduced in the Budget to the extent that those aforementioned gifts are now above 80% of CAT tax free threshold - would a return need to then be made retrospectively or not?

    Anyone know?
    Thanks.


Comments

  • #2
    Daxve
    Registered Users, Registered Users 2 Posts: 164 ✭✭Daxve


    No there is no need to make a retrospective return just because the limit is lowered and you might now exceed 80% of the current threshold. The threshold that was in place on the day that you received the gift or inheritance is all that matters.

    If no further gifts or inheritances from the same group are received no return or tax is due retrospectively.

    Any new gift or inheritance received from the same group is added to the old gift and taxed under the rules for aggregation (since 05/12/01).

    For example gift from parent to child in 2008 of €403,000 is below the 2008 threshold of €521,208 and is less than 80% (€416,966) so no return or tax due. The first €3,000 is not taxable under the small gift allowance so the net amount towards the threshold is €400,000

    In 2012 parent gives child an additional €13,000. Again the first €3,000 is disregarded and the balance is added to the previous amount for a life time gift total of €410,000. Now the €410,000 exceeds the current threshold of €250,000 so it's taxed as follows:

    Total of previous gift plus new gift - current threshold by current tax rate = (€400,000 + `€10,000 - €250,000) x 30% = €48,000

    less

    total of previous gift - current threshold by current rate
    = (€400,000 - €250,000) x 30% = €45,000

    = €48,000 - €45,000 tax due is €3,000

    Effectively you are only taxed on the new gift and the old gift is not being taxed retrospectively.


  • #3
    WexTK
    Closed Accounts Posts: 153 ✭✭WexTK


    Thanks Daxve! Great Reply! Good to know.
    regards WexTK


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