transfer of shares to grandchild

M

molliesassy

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My father wishes to transfer shares value approx €6000 into his grandchild's name (age 15). The shares were initially free when a certain building society floated.
What, if any, are the tax implications for doing this?
 
As far as I know (as a non tax expert!) ... gifting the shares is a disposal so your father is liable for CGT on the gain (i.e. the full €6K less any allowable expenses - probably none, his annual CGT allowance of €1,270, any previously incurred capital losses etc.) - i.e. €6,000 - €1,270 = €4,730 @ 20% = €946 (assuming no allowable expenses or capital losses).

The grandchild will have no Capital Acquisition/Gift Tax liability since it is below the exemption threshold (unless cumulative gifts to date exceed the threshold). Stamp duty on the transfer will be payable at half the normal rate (i.e. 0.5% instead of 1%) due to consanguinity relief.

If possible perhaps your father could transfer some of the shares to your mother so that her annual CGT allowance can be exploited. Such a transfer should not involve any charges including stamp duty and can be effected by contacting the company registrar. This will save €1,270 @ 20% = €254 in CGT that would otherwise be payable - i.e. a CGT tax bill of €692 instead of €946.
 
How much time would there be between the transfer to my mother and then transfer to the grandchild?
 
There is no time limit. If your father effects the transfer of €1,270 or more worth of shares to your mother then once the paperwork has been processed then she can gift her shares to the grandchild. I transferred some First Active shares to my wife free of charges/SD without much hassle in order to reduce the overall CGT bill and it was no hassle. See this thread. If I recall correctly I just sent the share certs with a CREST transfer form to the registrar and they issued new share certs in each of our names. Before doing anything wait and see if others here have anything to say - in particular addressing any possible errors or omissions in my comments above. In addition independent, professional advice might be worth seeking.
 
What about then gifting 1/2 this year & 1/2 next year to avail of two more €1,270's if not used elsewhere?
Also no expert.
 
Good point! Why didn't I think of that!? :eek: That would be 4 x €1,270 = €5,080 free of CGT. The balance of the €6,000 worth of shares (assuming they at least hold their value) could be transferred net of CGT or else held over for another year.
 
At the risk of sounding stupid, the end of the tax year is 31st December right? So some shares could be transferred now and more in January?
 
The tax year matches the calendar year but the deadlines for CGT assessment are different. See [broken link removed].
 
In this situation, is the grand-child liable for income tax on any dividends received from the shares?
 
If your father wills these shares to his grandchild instead of transferring them now, there will be no CGT and no CAT.

Oops sorry just noticed the date of the original post, long done by now I assume.
 
ClubMan said:
If possible perhaps your father could transfer some of the shares to your mother so that her annual CGT allowance can be exploited. Such a transfer should not involve any charges including stamp duty and can be effected by contacting the company registrar.
Click to expand...
You sure this is agreeable by revenue CM?

I seem to remember Revenue giving specific examples on one of the gifts tax briefings stating that any transfers for the sole purpose of CGT/CAT avoidance were considered as assessable by Revenue (I believe the example given was father wishing to gift to son, father gifts to the limit to son, father gifts remainder to mother, mother gifts to son. - Revenue claimed this would be deemed a gift from father to son and tax due...... to be honest, very tough for revenue to prove/chase up on a case like this). Just wanted to check if maybe I misunderstood the Revenue examples in light of this thread?

*Sorry. Didn't get a chance to chase up the Revenue doc in question. I'll update the post with it later as soon as I get a chance.

Update: [broken link removed]
It's not the exact document I remembered but has similiar details on it.

Looking back over my post the example was obviously wrong. The original example would have been grandfather to daughter, daughter to grandchild - would/could be deemed as grandfather to grandchild. (Mother and Father would be in the same group so an obvious error in my proposed sample example)

In the link above it provides details under "Part 4 - Item 2" (couldn't get the direct link bit set up and ain't got the time to mess with it to figure it out).

2. For gift tax only - did the disponer take any gift within 3 years prior to, or since, the date of gift entered in
Part 3 above?
Indicate by ticking () “yes” or “no” as appropriate.
This question relates to an anti-avoidance provision in section 8 of the Act, which is designed to prevent “gift splitting”.
Gift-splitting is best explained by way of an illustration. Where Disponer (B) makes a gift to Beneficiary (C) and in the three
years prior to or since making the gift to Beneficiary (C), Disponer (B) had taken a gift from another disponer, Disponer (A),
then the gift taken by (C) is deemed to have been taken from (A) and not (B).
Click to expand...

Again, the chances of getting caught are slim, but I wouldn't like anyone to get stung for it from advice from AAM without having the possible flaws pointed out.
 
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