Tax on gifts to adult children

Jellybaby_1

I'm sure this has been discussed before but I can't find it now and I just need clarification. I believe I can gift €3000 to each child tax free per year. I've been told it has to be lodged into a bank account, and what I want to know is, does it have to be a special bank account that has to be opened or is their savings account ok? I just want to do the right thing and not make a mess for them later on. Thanks in advance.

Jim_Hodge

You can give to to them any way you wish.

Jellybaby_1

Really? I was told it had to be lodged. Thanks for replying.

Princess Calla

It obviously makes it more transparent if it's lodged or done by electronic funds transfer.

Jellybaby_1

Indeed. I just wondered if perhaps the children had to open a special kind of account especially for gifting. If not, then I'll just use their own accounts for lodging. Many thanks.

Sarn

It’s the small gift exemption that you’re thinking of.

https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-exemptions/small-gift-exemption/index.aspx

You don’t need to be related to gift €3k to a person tax free per year.

Jellybaby_1

https://www.boards.ie/discussion/comment/120285313#Comment_120285313

Thank you for that.

Rockfish

I received a gift of €,7500 from a family member, can i just lodge this to my account with no questions asked etc? And would i be liable for CAT?

DownByTheGarden

https://www.boards.ie/discussion/comment/120439547#Comment_120439547

Think of 4500 of it as a loan that you will be paying them back over a few years in some form or other.

Rockfish

https://www.boards.ie/discussion/comment/120439580#Comment_120439580

I know what your'e saying but doesnt really help me

Geuze

https://www.boards.ie/discussion/comment/120439547#Comment_120439547

Have a read about CAT:

https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-thresholds-rates-and-aggregation-rules/index.aspx

What you do with the 7,500 is not relevant, you can spend it, save it, that is not relevant.

What is relevant is the relationship between you and the donor, and the lifetime gifts received by you.

Geuze

CAT groups and group thresholds

Note

Gifts and inheritances taken by a Spouse or Civil Partner are exempt from CAT.

If you are a widow, widower or a surviving civil partner, Surviving Spouse or Surviving Civil Partner Relief may apply to you. This relief may affect which threshold applies to you.

You do not pay tax on a gift or inheritance if its taxable value is below a particular threshold. The threshold you use depends on your relationship to the disponer. You must pay tax on any remaining value above that threshold.

There are three groups with different thresholds that apply from 7 December 2011.

Note

A ‘child’ includes a son, daughter, stepchild and certain foster children.

Group A

The Group A threshold applies where you, the beneficiary, on the date of the gift or inheritance are:

• a child of the:
  • disponer
  • disponer’s spouse or civil partner (commonly known as a stepchild)
• a minor child, under 18 years of age, of a deceased child of the:
  • disponer (commonly known as a grandchild)
  • disponer’s spouse or civil partner (commonly known as a step-grandchild)
• a parent of the disponer and you take an absolute interest (that is, not a limited interest) of an inheritance on the death of your child.
• a minor child of the spouse or civil partner of a deceased child of the:
  • disponer
  • disponer’s spouse or civil partner

Note

An Estate may consist of several different properties. It is not necessary for a parent to inherit the whole of an Estate in order to take an absolute interest. A person inherits an absolute interest in a property if the deceased has not attached any conditions or restrictions in relation to that property.

 

• Example 1
• Michael dies and, in his will, leaves:
• - a house to his mother, Catherine
• - a bank account to his father, Adam
• - shares to his sister, Susan.
• As both parents are receiving an absolute inheritance, with no conditions attached, Group A threshold applies to Catherine’s and Adam’s benefit from Michael.
• Example 2

 Group B

The Group B threshold applies where you, the beneficiary, on the date of the gift or inheritance are:

• a parent of the disponer, where you take a gift or a limited interest
• a brother or sister of the disponer
• a child of a brother or sister of the disponer (Favourite Nephew or Niece Relief may apply)
• a child of the civil partner of a brother or sister of the disponer
• a grandparent of the disponer
• a grandchild of the disponer
• a lineal ancestor or a lineal descendant of the disponer.

Group C

The Group C threshold applies where you, the beneficiary, on the date of the gift or inheritance have a relationship to the disponer not already covered in Groups A or B.

Geuze

Here are the CAT thresholds:

Rockfish

Thanks geuze, ya im an adult child of the disposer so no issue at all with tax as €75k is well below the threshold, im surpised the threshold is so high tbh

Geuze

A child can receive up to 335k free of CAT within category A, this is a lifetime allowance.