Tax free Gifts

[Emearr]

Im a 70% shareholder of a company can I gift the €3000 tax free sum from the company to my children

 

[TomEdison]

For CAT purposes, when a company makes a gift the company is "looked through", and the gift is taxed as one coming from the shareholders. So this would be treated in your child's hands as a gift coming 70% from you and 30% from whoever owns the rest of the shares. Because it doesn't exceed €3k it would be tax free. But if you're thinking that you personally could make another 3k gift to your child, also tax-free — no, you couldn't.

You also need to think about the tax consequences for the company and for you. A payment by the company to an associate of a participator will be regarded for tax purposes as a dividend paid by the company to you. So the company will need to deduct withholding tax, and you will be liable for income tax, PRSI and USC on the amount of the payment. You'll get a credit for the amount of withholding tax deducted by the company.

 

[Bronte]

Would it not be easier to give the 1K small benefit gift (say Dunnes stores vouchers). But I suppose the children would have to be employees. Then you're better off just gifting them 3k yourself.

 

[TomEdison]

Then you're better off just gifting them 3k yourself.

That's the whole idea. The idea underlying the legislation is that you shouldn't be able to secure a tax advantage by routing gifts to family members via a limited company.