Whether you have accumulated personal wealth, or it is tied up in your business, there are various reliefs and areas of planning you can implement to ensure that as much of that hard-earned wealth remains in your family.
Firstly, we have outlined what is taxable and how it is calculated.
Who and what is taxable?
A CAT liability of 33% may apply where:
Mary received a taxable gift from her Father in 2005 – €20,000
Upon the death of her Father she inherits the following:
|Total Benefits Received||€370,000|
|Relevant Group Threshold||(€320,000)|
|CAT Due at 33%||€16,500|
Revenue consider the following as “normal payments” and therefore may not fall within the scope of CAT:
It is important to remember that CAT is a self-assessment tax. A CAT Return must be filed with Revenue Commissioners where the inheritance/gift either by itself or when aggregated with prior gifts exceeds 80% of the appropriate tax-free threshold amount mentioned above.
In general, a gift from one individual to another may result in either Capital Acquisitions Tax (CAT) at 33% falling due, or a reduction in the recipient’s lifetime tax free threshold.
However, CAT legislation allows for an exemption from tax for the first €3,000 of any gift given by one individual to another, per year. There is no need for the recipient to be a relative of the donor and this exemption is “per transaction”. In other words, an individual can gift and/or receive up to €3,000 per annum to and/or from any or many individuals per year.
Each grandparent could gift each of their grandchildren €3,000 per annum resulting in a tax free gift to each grandchild of €60,000 over 10 years, without effecting their lifetime tax free threshold amounts.
Where gifting €3,000 to an adult, there are generally no issues. However, where you gift money to a child it is important that you clearly demonstrate that the child is the beneficiary of the funds i.e. a savings policy in their name. This type of policy can be arranged where the adult is the policy owner of the savings policy and once the policy is issued, the ownership of the contract is transferred to the child using a Deed of Assignment.
The Annual Gift Exemption cannot be carried over year to year if unused…. Use it or Lose it!
Should you require financial advice, please contact Harvest Financial Services on 01 2375500 or email firstname.lastname@example.org and one of our advisors will assist you.
This marketing information has been provided for discussion purposes only. It is not advice and does not take into account the investment needs and objectives, financial position, risk attitude, liquidity needs, capital security needs and / or capacity for loss of any particular person. It should not be relied upon to make investment decisions.
The particular tax treatment contained herein is based on Harvest Financial Services Limited’s understanding of current Revenue practice as at January 2019. Please note that the tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should take such independent tax advice as you deem appropriate.
The legislative information contained herein is based on Harvest Financial Services Limited’s understanding of current practice as at January 2019 and may be subject to change in the future.