Capital gains tax evasion loophole

JumpShivers

This is not seeking legal advice, I am just interested in the legalities / logistics of doing this.

Say for example John Smith won an obscene amount f money in the lotto (say, 10 million) and he wanted to give 1 million to his favourite auntie Mary.

The government would obviously want a 40% slice for capital gains.

Could John not put 1 million into an account and simply change the name on account to Mary.

Or could he just keep 1 million in a different account in his name and give Mary access to the account pin number etc so she can spend the million.





Just curious thanks for replies. Sorry if it's a stupid question.

coylemj

If you were to suggest only one putative 'loophole' we might take you seriously, instead you propose two which identifies this as a fishing expedition. Clearly the other term in the thread title is what we're talking about - 'tax evasion' which is illegal.

No bank in this part of the world will allow you to stuff a pile of money into an account and then change the name on the account.

ABC101

I thought CGT was at 33% not 40%?

If you were to come across 10 million... I think you would be paying a visit to a tax adviser.

coylemj

ABC101 wrote: »

I thought CGT was at 33% not 40%?

Correct...

http://www.revenue.ie/en/tax/cat/rates.html

Pat Mustard

Capital Gains Tax is charged on the gain made upon the disposal of an asset.

There must be disposal of an asset and there must be a gain or deemed gain on that disposal.

No gain is made here. John Smith has made a gift of €1m to his aunt. This is not a gain. He is down by €1m.

This is a Capital Acquisitions Tax question of how much CAT should be payable by the aunt in relation to the gift of €1m that was made to her.

Peregrinus

Yup, no Capital Gains Tax here. Capital Acquisitions Tax is the relevant tax.

John is making a gift of one million euros to Mary. Liablity to CAT doesn't depend on whether he makes the gift by writing her a cheque, by depositing money in her account, by giving her signing authority over his account, by buying a million-euro diamond and presenting it to her, or by handing her a shoebox full of banknotes.

Marcusm

A smart John would have both parties sign the back of the Lotto ticket indicating an interest of 90/10 prior to presenting it to the National Lottery. He would of course have to have done that, or satisfied himself that it was what was intended at the point of purchase, prior to the draw.

daheff

Firstly, congratulations on your 10m lotto win. I couldn't find my ticket and thought it might be me...but as you've won I can stop my search for my lost ticket.


to answer your question, (and IIRC) the lotto has advised that people can and do have syndicates with different shareholdings...so it would be best to have your aunty give you 10% of the cost of the ticket to 'buy' her share of the syndicate and then she can legally be entitled to 10% of the winnings.


Or as some other (slightly twisted) poster suggested, marry her!! but then shes entitled to 50% of all your assets (and probably your sanity :eek:) -don't be surprised though when your family & friends give you strange looks

MarkAnthony

What would the tax implications of setting up a trust for the €1m?

Mr. Incognito

MarkAnthony wrote: »

What would the tax implications of setting up a trust for the €1m?

If the trustees can control it they are the beneficiaries and taxed on the income.

If its an irrevocable trust for educational or chaitable purposes there is tax relief on the cat element but still pay cgt on the disposal.

Peregrinus

Mr. Incognito wrote: »

If the trustees can control it they are the beneficiaries and taxed on the income.

Plus, when the trustees distribute funds out of the trust to beneficiaries (like Auntie Mary), those distributions are gifts, and attract Capital Acquisitions Tax.

the world wonders

JumpShivers wrote: »

The government would obviously want a 40% slice for capital gains.

Could John not put 1 million into an account and simply change the name on account to Mary.

Or could he just keep 1 million in a different account in his name and give Mary access to the account pin number etc so she can spend the million.

Guys I think I found a loophole in the bank robbery laws, you just wear a balaclava and nobody will know it was you! Can any lawyers comment on the legal validity of this tactic?