Using gift money to employ carer for Dad

[60watt]

Hi,

My father, age 77, lives at home in his own house, unfortunately he had a stroke recently. He wants to remain at home and employ a private career 5 days per week, he will use his savings to pay for this. The private career will cost roughly €25,000 per annum Gross. I know from revenue.ie there is tax relief at your marginal tax rate for employing a career, but Dad is exempt from Income Tax now because his only income is a portion of the state pension.

I myself am a PAYE worker. I'm wondering if my father is allowed to gift me €25,000 per annum from his savings, and I then use that to employ and pay the career each month, and claim the 40% tax relief ?

My main question is from a revenue point of view, am I allowed to use the money gifted from Dad to pay for his career, and then can I claim the tax relief, which for me would be 40% ?

Thanks.

 

[T McGibney]

You need to discuss this with your accountant. Having your father gift you €25k a year to finance your employment of his carer in order for you to claim tax relief could be construed by Revenue as artificial tax avoidance on your part and in such an eventuality, the onus would be on you as the claimant to prove that it wasn't. A less obvious but similar strategy might be advised depending on your own and your father's situation.

 

[Peanuts20]

Given the circumstances, you should also be going through the state home care package to see what they can give. My own experience is that if you go private, you will drop down the priority list on the state side (regardless of what the official line is on that)

you also need to think further on Fair Deal, they can ask for details of any "gifts" over the previous 5 years as part of their calculation and I know their is a valid reason for what you are contemplating doing but it may have an impact on any Fair deal application.

 

[PaddyBloggit]

I'm wondering if my father is allowed to gift me 25,000 per annum, and I then use that to employ and pay the carer each month?

I don't get this.

If your father has the funds to directly emply a carer; then, why doesn't he?

What's the point in giving it to you to give to them?

 

[T McGibney]

I don't get this.

If your father has the funds to directly emply a carer; then, why doesn't he?

What's the point in giving it to you to give to them?

His only income is some state pension.


My main question is from a revenue point of view, am I allowed to use the gift from Dad to pay for his carer,
and then can I claim the tax relief, which would be 40% ?

 

[Brendan Burgess]

You need to discuss this with your accountant.

A less obvious but similar strategy might be advised depending on your own and your father's situation.

This is what you need to do. You have an accountant, so talk to them about it.

Brendan

 

[Black Sheep]

Is there any family member, friend or neighbour who might be willing or able to do part time caring on a carer's Allowance and he may be able to pay a part time carer from his savings to do the remainder of the caring.

 

[Pinoy adventure]

Talk with your public health nurse and see if home care could be provided for him(even if it’s a couple of hours a day ).

 

[60watt]

I don't get this.

If your father has the funds to directly emply a carer; then, why doesn't he?

What's the point in giving it to you to give to them?

 

[60watt]

Thanks everyone for the replies so far.
Just to be clear, I'm not looking for advice on Dad's choices for care. There is a massive shortage of carers in the country.
After many months of research, we have decided this private care provider is most suitable for our needs. (and hopefully we will also get the few home help hours he has been approved from the HSE, if they ever get carer's to fill those hours.)

I agree with Brendan's answer to ask my accountants advice about getting the 40% tax relief, considering Im being gifted the money...

But I asked the question here because there are a lot of experienced and knowledgeable people regarding tax matter's.
If anybody knows the answer, it's much appreciated. Thanks

 

[Peanuts20]

Revenue have a good explanation here of how the tax relief works

Amount of relief

You can claim tax relief if you employ someone to take care of an incapacitated relative

www.revenue.ie

bear in mind, if you apply for Fair deal further down the line, any "gifts" for the previous 5 years will almost certainly be included in their calculation

so the big issue is will you be hit with CAT for all or some of what your Dad will give you.

 

[60watt]

Revenue have a good explanation here of how the tax relief works

Amount of relief

You can claim tax relief if you employ someone to take care of an incapacitated relative

www.revenue.ie

bear in mind, if you apply for Fair deal further down the line, any "gifts" for the previous 5 years will almost certainly be included in their calculation

so the big issue is will you be hit with CAT for all or some of what your Dad will give you.

Thanks, but I understand how the fair deal scheme works regarding the 5 year rule for the means test.
And I'm also aware if I get gift/inheritance from Dad in excess of €335,000, I pay CAT on that.

But my only question for now relates to private home care:
From a revenue point of view, Am I allowed to use the money gifted to me from Dad to pay for his career, and then can I claim the tax relief, which for me would be 40% ? As I said above, if Dad pays for the career, Dad cannot avail of the 40% tax relief, because he is over 65 and his only income is a portion of the state pension, thus he is exempt from income tax.

 

[T McGibney]

But my only question for now relates to private home care:
From a revenue point of view, Am I allowed to use the money gifted to me from Dad to pay for his career, and then can I claim the tax relief, which for me would be 40% ? As I said above, if Dad pays for the career, Dad cannot avail of the 40% tax relief, because he is over 65 and his only income is a portion of the state pension, thus he is exempt from income tax.

I told you the answer to this yesterday.

Yes, you can claim the tax relief but once you're using your father's money to finance the payments, there's a risk that Revenue would treat your claim as artificial tax avoidance, and ultimately force you to repay the tax relief along with interest and penalties.

You need to devise an alternative strategy that eliminates this risk. Hence my suggestion that you discuss it with your accountant.