Just putting out a hypothetically situation based on the fact that Australia has zero inheritance tax. If an elderly couple move to Australia for few years (five years ordinary resident) and buy a property. They can gift thier home to children settled in Australia before returning to Ireland. Does that make inheritance tax free ?
Inheritance tax in Australia
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Brendan Burgess
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Why would they need to buy a home?
If it works, just give them the cash.
Brendan
If it works, just give them the cash.
Brendan
I think they would need to already have the rights to reside in Australia. A relation tried to move there to be with their only remaining close family relatives. But could not get the required visa, because they were of an age where they could become a burden on the state.
Nitpick: We're not really talking about inheritance tax, are we, since the couple won't be dead? It's gift tax.
As Towger says, don't assume that it would be easy for an elderly couple to relocate to Australia for a period of years, purely on the basis that they have adult children living there. I'm not saying it's impossible, but Australia does not encourage this, or make it easy.
But, for the scheme to work, they don't have to move to Australia; they just have to leave Ireland for long enough to cease to be ordinarily resident in Ireland. No doubt there are cheap and sunny places that they could go to.
If they're not resident or ordinarily resident in Ireland, and the children to whom they are giving property are not resident or ordinarily resident in Ireland, and the property given is not situated in Ireland, then there will be no charge to Irish CAT on the gift. As Brendan points out, no need to incur the frictional costs of buying and selling a house to make this work.
But emigrating for five years may be a lot to ask of an elderly couple just so their children can save a few shillings in gift tax. If they've always wanted to live abroad for a while and see retirement as an opportunity to do that, great. But if they wouldn't do this other than for tax reasons, then such a radical change in life and lifestyle, disruption of social network, change of medical and other service providers, etc, is a lot of stress to take on just so that somebody else can save a bit of money. Just sayin'.
As Towger says, don't assume that it would be easy for an elderly couple to relocate to Australia for a period of years, purely on the basis that they have adult children living there. I'm not saying it's impossible, but Australia does not encourage this, or make it easy.
But, for the scheme to work, they don't have to move to Australia; they just have to leave Ireland for long enough to cease to be ordinarily resident in Ireland. No doubt there are cheap and sunny places that they could go to.
If they're not resident or ordinarily resident in Ireland, and the children to whom they are giving property are not resident or ordinarily resident in Ireland, and the property given is not situated in Ireland, then there will be no charge to Irish CAT on the gift. As Brendan points out, no need to incur the frictional costs of buying and selling a house to make this work.
But emigrating for five years may be a lot to ask of an elderly couple just so their children can save a few shillings in gift tax. If they've always wanted to live abroad for a while and see retirement as an opportunity to do that, great. But if they wouldn't do this other than for tax reasons, then such a radical change in life and lifestyle, disruption of social network, change of medical and other service providers, etc, is a lot of stress to take on just so that somebody else can save a bit of money. Just sayin'.
Nitpick on your nitpick - isn't it actually Capital Acquisitions Tax in both cases?
Clarification in response to nitpick on nitpick: It is indeed capital acquistions tax, but under the legislation capital acquisitions tax is called inheritance tax when it arises in relation to a taxable inheritance, and gift tax when it arises in relation to a taxable gift. In the context of the OP "gift tax" and "capital acquistions tax" would both be correct, but "inheritance tax" is, nitpickily speaking, wrong.
The distinction mattered a lot more in the dear, dead days beyond recall when gift tax was charged at a lower rate than inheritance tax. But since (I think) 1999 gifts and inheritances have been taxed at the same rates.
The distinction mattered a lot more in the dear, dead days beyond recall when gift tax was charged at a lower rate than inheritance tax. But since (I think) 1999 gifts and inheritances have been taxed at the same rates.
The hypothetically parents in question would have to place a disturbingly high value on money and have passed on said value to their children.
I think paying for a night class in philosophy for their children and a few months of counselling would have a far more beneficial impact on their long term happiness.
Every_blooming
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In your scenario both the disponer and recipient will be Irish non resident / non ordinarily resident and the asset will be located in Australia, so it seems it would be exempt, unless there's a hidden catch
Gordon Gekko
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It’s hard to see why anyone would do this unless the amounts involved were very large and the parents were relatively young and mobile.