Gift of money to clear sister's debt - tax implications.

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Gazzaman

Registered User
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My sister needs a debt paying off pretty quickly. It's a local credit union settlement debt. It's for 38k

Can I pay her debt for her? If so
What are my likely tax implications?
Or
Instead
What if I gave her the 38K and bought her car of her?
 
Have you read the revenues info on Capital Acquisitions Tax? Its all in there.

No tax implications for you - any implications are for her.
Sister is Cat B, Allowance 32500 tax free lifetime allowance presuming this is your first gift. Then you have the 3k annual allowance from you to her (and your partner to her if you have one). If you have a partner this is past 38K. If not then technically she has 35500 this year tax free and would pay CAT on the rest. This, or any amount of the 38k, could be done as a loan to avoid the tax as long as some agreement done up.
You could buy car at market value (with a generous valuation) but any ridiculous valuation would be seen liable for CAT if over thresholds.
 
Never read a thing, just was goggling and ended up here.
Thanks for advice
Said I would ask the nice people in the know!
so once in a life time gift of 32k - I could pay that to the credit union.
And then I could send another 3k to credit union as my 3k gift
And my wife do the same and not break any rules about gifting.

Thanks again
 
Can she then at some stage return the money to me via the same method, once in a life time gift, is there any time frames that need to be considered.
 
Theoretically yes, but that would be a waste of lifetime gift allowances that you may or may not need in the future. If there is intent from her to pay you back then by far the best way is to set up as a loan (interest only?) and then use your annual 3k gift allowance to offset the interest she owes you each year until the loan is paid back.

Either you could pay credit union, or pay her - doesn't make much difference.

If you do it as a gift of more than 80% of the 32500 then she needs to file a return. All info on revenues pages on CAT.

Keep a clear record of what you do.
 
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