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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