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Options Available To Save For Children

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Over the last few years, there has been a lot of interest in gifting cash to

children and availing of the annual Small Gifts Exemption. In particular,

grandparents want to pass some of their accumulated wealth to

grandchildren and would like to do so in a tax efficient manner. It is

interesting to note that this grouping accounted for €236,650,000 of the

€522,000,000 Capital Acquisitions Tax take for 2018*.


Gift tax comes under the Capital Acquisitions Tax ‘umbrella’ and is

payable on certain gifts made during the lifetime of the donor. The

person making the gift is called the donor or disponer and the person

receiving the gift is called the donee. A gift is taken when a donee

becomes beneficially entitled in possession to some property or asset.


The tax, if any, is payable by the person receiving the gift. However, the

thresholds for Capital Acquisitions Tax apply so if the value of the gift

comes under the threshold amount, no tax is payable until such time as

the value of all accumulated gifts exceed the relevant threshold.


These thresholds can be reached either by a single gift or by a series of

gifts and inheritances over a period of years. Only prior gifts and

inheritances to which the same group threshold applies are aggregated

(added together) for the purposes of calculating tax.


However, there are several exemptions available for Gift Tax, one of

which is the Small Gifts Exemption (SGE), amounting to the first €3,000

of all gifts taken by a donee from one disponer in any calendar year.


** Source: Revenue.ie *Irish Statute book

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