Gift of money to parent

[Tammy123]

My father recently died, and it seems his pension does not transfer to her, leaving her with only her NC state pension. I would like to supplement this a little and wonder if there is a tax efficient way of doing this?

 

[aristotle]

Might be other ways but I know of this:

http://www.citizensinformation.ie/e...ax_credits_and_reliefs/deeds_of_covenant.html

 

[stephnyc]

citizens information also says "The first €3,000 of the total value of all gifts received from one person in any calendar year is exempt." and if you have a partner, they can also gift 3K in a year tax free. Unless you are talking big sums, this might be enough?

 

[Tammy123]

Yes I think it would - and thanks for the link, I read it and think she won't become liable for any tax on it. I don't quite understand if I can claim back any tax since it is to support an elderly parent, will read it again!

 

[Monbretia]

You can do the deed of covenant for an amount that will bring your parent up to the tax limit before she has to pay tax, you make out the deed for the gross amount but only pay the net amount less 20% tax, as your parent will have no tax liability they can then claim back the 20% tax you paid.

You personally will only receive a tax benefit if you are on the higher rate of tax as the amount the deed is for will be considered not your money anymore so if you paid tax on it at 41% (or whatever the high rate is now) then your parent claims back the 20% amount and you claim back the balance.

I have this running for my father for many years, 3 family member contribute to bring it to the max.

 

[Tammy123]

Monbretia that sounds like exactly what I was looking for - If you are aware of any resource with info on this I'd appreciate it, and thank you so much!

 

[Monbretia]

The leaflet explaining it and the forms to do it are on this page on Revenue site

[broken link removed]

It can sound complicated but once you get your head around it it's quite straighforward. I do a one off lodgement every year to my father's bank account but you can do monthly either if that suits better. Then as soon as January comes I will submit his claim to get the tax back with a copy of his bank statement showing the lodgments. Make sure the lodgement shows up on the statement with the name of the person lodging it to prove where it came from.