Is using the Small Gift €3,000 CAT exemption every year risky?

[Brendan Burgess]

He can also get €3,000 small gift each year from anyone.

So Uncle Tom, Aunt Tom, Daddy and Mammy can each give him €3,000 each and every year without impacting the thresholds.

Brendan

 

[T McGibney]

Plus, Joe can also receive € 12,000 per Anum, in gifts totally tax free from Liam, Peg , Tom and Mary?
In addition, his spouse can receive €12k per anum , tax free as well from Liam , Peg , Tom and Mary?

In real life, anyone utilising the annual small gift exemption in such a systematic manner would be at risk of falling foul of general anti-avoidance legislation with a resulting possibility of very messy consequences.

 

[Gordon Gekko]

In real life, anyone utilising the annual small gift exemption in such a systematic manner would be at risk of falling foul of general anti-avoidance legislation with a resulting possibility of very messy consequences.

Hi Tom,

Sorry, but that isn’t correct.

Anyone can gift anyone €3,000 a year under the Small Gift Exemption.

There’s nothing “systematic” about one couple gifting €12,000 to another couple.

Gordon

 

[T McGibney]

Hi Tom,

Sorry, but that isn’t correct.

Anyone can gift anyone €3,000 a year under the Small Gift Exemption.

There’s nothing “systematic” about one couple gifting €12,000 to another couple.

Gordon

Hi Gordon, as a once-off, yes, but repeat it enough times and I fear the recipients may in time find themselves with some explaining to do. Caveat emptor and all that.

 

[Gordon Gekko]

Hi Gordon, as a once-off, yes, but repeat it enough times and I fear the recipients may in time find themselves with some explaining to do. Caveat emptor and all that.

I don’t agree to be honest.

If my parents plus my aunt and uncle want to gift Mrs Gekko and I €12,000 a year, every year, they’re entitled to do so.

Yes, if it’s part of some scheme for me to pay their nursing home fees or to covenant them money, it would fall foul of general anti-avoidance rules.

But for bona fide gifts where they’ve loads of money, we don’t, and they want to gift money to us now to avoid inheritance tax down the line, there’s zero risk of Section 811 being invoked. An Appeal Commissioner would laugh such a case out the door, not that it would ever get that far.

I’m all for caution, but I think you’re going too far.

Gordon

 

[T McGibney]

I don’t agree to be honest.

If my parents plus my aunt and uncle want to gift Mrs Gekko and I €12,000 a year, every year, they’re entitled to do so.

Yes, if it’s part of some scheme for me to pay their nursing home fees or to covenant them money, it would fall foul of general anti-avoidance rules.

But for bona fide gifts where they’ve loads of money, we don’t, and they want to gift money to us now to avoid inheritance tax down the line, there’s zero risk of Section 811 being invoked. An Appeal Commissioner would laugh such a case out the door, not that it would ever get that far.

I’m all for caution, but I think you’re going too far.

Gordon

It all depends on the circumstances of the case and how far an inspector who would be motivated to challenge such an arrangement in the first instance would be prepared to go to pursue it.

General anti-avoidance is subtly different from other aspects of the tax code in that it explicitly leaves the burden of proof on the claimant, and human nature being what it is, there may well be a reasonable assumption on the part of an inspector that a particular claimant or family of claimants wouldn't have the bottle to defend their claims as far as the Appeal Commissioners.

In that light, it world be a foolhardy advisor who would counsel a client that utilising the small gift exemption to such an extent as posited by the OP is a risk-free enterprise.

 

[Gordon Gekko]

It all depends on the circumstances of the case and how far an inspector who would be motivated to challenge such an arrangement in the first instance would be prepared to go to pursue it.

General anti-avoidance is subtly different from other aspects of the tax code in that it explicitly leaves the burden of proof on the claimant, and human nature being what it is, there may well be a reasonable assumption on the part of an inspector that a particular claimant or family of claimants wouldn't have the bottle to defend their claims as far as the Appeal Commissioners.

In that light, it world be a foolhardy advisor who would counsel a client that utilising the small gift exemption to such an extent as posited by the OP is a risk-free enterprise.

You think an inspector would have any interest in a mother and father plus aunt and uncle gifting €3,000 a year to a married couple?

 

[T McGibney]

You think an inspector would have any interest in a mother and father plus aunt and uncle gifting €3,000 a year to a married couple?

That's not what I said. My comment referred to a different suggestion. Read back.

 

[Gordon Gekko]

That's not what I said. My comment wa
uggestionRead back.

Tommy, it’s risk free. It is using legislation in the correct manner. I genuinely think you’re being way too cautious here. No Inspector would have an issue with this. Yes, if the recipents were then doing something else like paying nursing home fees. Every person with a few bob who gets succession planning advice does this. Your position implies that parents giving their daughter and son-in-law €12,000 every year is somehow a problem, which it isn’t.