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CAT and small gift exemption.

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  • 11-04-2024 8:35pm
    #1
    ShingBang
    Registered Users Posts: 2 ✭


    I understand that gifts made within the two years preceding the death of the donor are treated as inheritance rather than gifts. Does this also apply to the €3,000 small gift exemption?

    Example: A donor gives a gift of €12,000 to a friend (CAT Group C). For each of the following three years, the donor gives an additional €3,000, with the intention that these are small gifts and exempt from CAT. The donor then dies. Are the last two gifts then treated as inheritance, and lumped with the initial €12,000 to create an €18,000 inheritance, which would yield a CAT liability of €18,000 - €16,250 = €1,750 and a tax bill @ 33% = €583.33 ?

    Or do the two final gifts retain their exempt status, so that the only the initial gift of €12,000 is considered, yielding no tax liability?

    Thanks in anticipation



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    #2
    ShingBang
    Registered Users Posts: 2 ✭ShingBang


    For anyone interested, I eventually found the answer to my own question. The CAT Manual Part 23 - Exemptions states that the small gifts exemption "is not available for inheritances. However, it does apply in circumstances where a gift becomes an inheritance by reason of the death of the disponer within 2 years of the date of the gift".

    Hence in my example above, it appears that the two final gifts retain their exempt status, and are not aggregated with the initial lump sum, so there is no liability for CAT in this case.



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