Annual gift Exemption CAT

T

taxbill

Registered User
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Hi there can anyone please clarify how the annual exemption works.

Is it €3,000 pa.

Does that mean you can gift €3,000 pa to anyone per annum without them having any tax liability?

Do you need to declare this in your Annual Tax returns if you received such a gift even though you have no liability?

Do you need to declare that you GAVE this amount if you are the disponer?

Is it €3,000 in total per annnum from all sources that you can receive or per disponer?

As a disponer can you make as many €3,000 gifts to as many individuals as you wish?

Thanks
 
taxbill said:
Hi there can anyone please clarify how the annual exemption works.

Is it €3,000 pa.

Does that mean you can gift €3,000 pa to anyone per annum without them having any tax liability?
Click to expand...
yes
Do you need to declare this in your Annual Tax returns if you received such a gift even though you have no liability?
Click to expand...
No
Do you need to declare that you GAVE this amount if you are the disponer?
Click to expand...
no
Is it €3,000 in total per annnum from all sources that you can receive or per disponer?
Click to expand...
per disponer, per annum
As a disponer can you make as many €3,000 gifts to as many individuals as you wish?

Thanks
Click to expand...

yes
 
Thanks Nige, what wonderful service.

I am surprised that it is per disponer and not cumulative. So theoritically if you had 20 rich firends and relatives who each gave you €3,000, you could receive €60,000 pa in gifts and not have any tax liability?
 
So theoritically if you had 20 rich firends and relatives who each gave you €3,000, you could receive €60,000 pa in gifts and not have any tax liability?
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Up to the max allowed for each catogory

from revenue website - the approx amounts are mine
Group A:
Approx €496K. This applies to a child, a step child, a foster child in certain circumstances and to a grandchild under the age of 18 of the donor whose parent is dead.
Group B:
Approx €49.6K Included in this class are brothers, sisters, nephews and nieces.
Group C:
Approx €24.8K This applies to a donee who does not come under Class A or B.

These thresholds can be reached either by a single gift or by a collection of a number of gifts and inheritances over a period of years. Only prior gifts and inheritances to which the same group threshold apply are aggregated (added together) for the purposes of calculating tax. Special arrangements may apply where there has been a prior inheritance from a parent.
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Hang on,

i thought the whole idea of the annual small gift exemption was that it did not affect your CAT threshold.

i.e. If your cousin gifts you €3,000 that €3,000 does not get deducted from your €46.9k threshold.

If the €3,000 exemption is PER DISPONER per annual as Nige stated,
then
if another cousin gifts you another €3,000, does that 2nd gift then get deducted from your threshold?.

If so then it is not really a small gift exemption of €3,000 PER DISPONER as if you receive more than one such small gift from within the same threshold category then it reduces you CAT threshold accordingly. That make it cumulative doesn't it?
 
Taxbill, you have it right, the first €3,000 per disponer per annum is ignored for CAT purposes and does not eat into your threshold.
 
That law seems tailor made for dodgy politicians if you ask me
 
taxbill said:
What does the comment "Special arrangements may apply where there has been a prior inheritance from a parent." mean?
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Normally, the threshold between a child and a parent where the parents inherit from the child is the Group B threshold.

However, if that child has received a gift from its parents in the five years (I think) before the child dies, the inheritance received by the parents is exempt from tax. If the gift from the parents was given more than five years before the child dies, the Group A threshold applies.
 
Excellent thread. can i gift my parents 20k of my ssia to take off there mortgage they are also first time buyers does this affect the gift. and as the threshold is 49.6k is this the amount i can gift to them in my lifetime
 
oaky9 said:
Excellent thread. can i gift my parents 20k of my ssia to take off there mortgage they are also first time buyers does this affect the gift. and as the threshold is 49.6k is this the amount i can gift to them in my lifetime
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the 49.6k limit is their lifetime limit from that category of relatives, so if they've taken other gifts or inheritances from siblings, uncles, aunts or other children, that will eat into it.

If not, there's no problem. The first €3k that you give to each parent will be disregarded, so the €20k gift will be treated as €7k each. Their first time buyer status doesn't affect anything.
 
Thanks nige for your instant reply, do i need to fill out any forms for revenue when gifting my parents the 20k , sorry should have included this in my first question
 
oaky9 said:
Thanks nige for your instant reply, do i need to fill out any forms for revenue when gifting my parents the 20k , sorry should have included this in my first question
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Provided your gift does not take to up to (or beyond) 80% of their threshold amounts, there is no need to complete any forms. If it does, they should both complete a form IT38.
 
ok nige last question for you, i would like this gift exempion to help my father and parents pay off there large loans so is it ok to do the following. (A) father has bridging loan of 40k so can my brother, my wife, his wife and myself each give him 3k this year to take off this without any tax implications (=12k leaving 28k) and do the same next year (28k-12k = 16k) if so it would be brilliant.

(B) my parents have large mortgage of 295k and my brother and i would like to gift them the max threshold next year of approx 46.5k , is it ok for my wife to contribute to this 46.5k or can only my brother and i do this, and i take it we have to fill out form IT38 with our accountants to keep everything above board.
 
Suggestion A works just as you have outlined.

B - is a little more complex. If your father has not received previous gifts (not covered by the small gift exemption) or inheritances from siblings, aunts, uncles, children, since 5 December 1991, then yourself and your brother can gift him the 46k between you without tax.

Your wife is not a Group B relative as she is not related to your father. Any gift (above the small gift exemption) that she gave him would be taxed using the Group C threshold (and again, whether that is taxable depends on previous gifts/inheritances since December 1991).
 
will just leave my wife out of it and will reach the threshold in the following year seems the best way to do it. this is a good way of reducing your siblings loans and was not aware of it before , you have to be very generous too i admit. thanks nige.
 
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