FAQ Small gift exemption from CAT

Brendan Burgess

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A small gift exemption of €3,000 applies to a gift, taken from any one giver in a calendar year.


So you can receive a gift from a total stranger of €3,000 on 31st December and a further gift of €3,000 on 1 January the following year. You pay no CAT and you don’t have to declare it. Nor does it affect your threshold for CAT.


From the Revenue Guide


1.2 Small Gift Exemption.

In addition to this €225,000 tax-free threshold, the first €3,000 of gifts to a child in any

year is exempt from CAT under the annual small gifts exemption. This means that

each parent can give a gift to a value of €3,000 to a child (or to anyone else) each

calendar year without any CAT charge arising. So, two parents can make gifts to a

child to the value of €6,000 in any year free of CAT. Indeed, two parents could, if

they wished, gift €12,000 in total each year to each son or daughter and their

respective partner (e.g. fiancée, fiancé, daughter-in-law, son-in-law) free of CAT.

There is no obligation on a beneficiary of a gift to spend it in the year it is received.

Gifts can be accumulated by the child after receipt to meet future expenditure e.g. to

meet a deposit on a house.


Gifts which qualify for the small gifts exemption do not reduce the parent to child tax–

free threshold of €225,000 – gifts in excess of the small gifts exemption reduce the

threshold after taking the exemption into account.


There is no age limit

A parent can give a gift to a 5 year old as long as it passes to the ownership of the 5 year old.




The ownership of the money must clearly pass to the recipient e.g. into their bank account




What if I get a gift of €10,000?

Is the first €3,000 exempt and only €7,000 is assessable?
 
Hi Brendan

A useful point in the context of parents giving gifts at Christmas etc is that with a gift of a cheque, it's when the cheque is cashed rather than received. With the irregular banking hours over the festive period, one could easily overlook this. And people with the means to do this are likely to be of an age where cheques are still popular.

Regards

Gordon
 
Just to clarify something,if a person dies and leaves you a cash inheritance can you claim the first €3,000 before you apply your allowance.
 
I have never known the answer to this particular question?

It seems pretty clear in the Revenue guidance

23.2 Exemption of small gifts
CATCA 2003 s.69 provides an exemption for gifts (but not inheritances) of up to
€3,000 taken by a person from any disponer in a calendar year. Any gifts within this
limit are not taken into account in computing tax and are not included in any future
aggregation. Where a gift exceeds this limit only the excess is to be taken into
account for the purposes of calculating gift tax.
Example
Tom makes a cash gift of €30,000 to his granddaughter Joan in 2015. Tom has made
no other gifts to Joan in 2015. The taxable value of the gift is €27,000 after the small
gift exemption of €3,000 is deducted.
 
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