Is there any definition of a gift for CAT purposes. For example, would a contribution by a parent to the cost of a son’s wedding be a gift for CAT purposes? Also does the €3,000 exemption, introduced recently, now apply to each earlier year?
Mr PO'R, email
There is a definition of a gift in terms of liability for capital acquisitions tax, but I wouldn't be surprised if most people have transgressed without even thinking about it.
Essentially, according to Revenue, "typical gifts" include cash, jewellery, a car, a house or land, stocks or shares.
Notably, among the exceptions, are “payments for support, maintenance and education of members of the family which are part of normal expenditure”.
So which is this? I think the Revenue view might be that you’d struggle to say it was part of normal payment within the family.
However, I’m quite certain more than one parent has contributed to the expense of a wedding without any view that it was a Revenue matter.
Until recently, it was common custom in Ireland for parents – especially of the bride – to bear the brunt of the cost of a wedding, and I’m quite sure none of them ever considered it a taxable issue. I doubt the Revenue would chase you for it . . . unless the wedding is off the scale in terms of spending.
The issue of the €3,000 exemption is more straight- forward. This “small gift exemption” has been around for a long time – although it used to be closer to €1,000.
However, it applies only to a year in which it has been made. You cannot "gift", say, €24,000 on the basis that you have not used the exemption in the previous eight years – you cannot carry it forward. Nor can you gift more than €3,000 in one year and try to spread it over subsequent periods.
Medical card thresholds and assessing savings
I know old age pensioners qualify for GMS (without prescription medicine) if they earn below €73,000. What is the income threshold below one must earn to qualify for GMS prescription medicine which was brought in at the last budget?
When calculating the income, is the interest on post office saving certs/bonds taken into consideration on which there is no DIRT?
Mr TM, email
When you say GMS (without prescription medicines) qualification, I assume you mean the GP visit card which is available to people who may have more income than permissible for a medical card but are still eligible for some support.
The income limit for a couple over the age of 70 on the GP visit card is €1,400 gross per week – €700 for an individual. This amounts to an annual sum of €72,800.
For the medical card, a couple over 70 cannot have a gross income of more than €1,200 a week – €600 for a person living alone. That amounts to annual gross income of €62,400.
In calculating gross income, the department takes all sources of income into account – your pension, any other earnings and income from savings or other assets such as rental property. However, the first €36,000 of savings for an individual is not taken into consideration – €72,000 for a couple.
For anything over this, there are two options. Remember, it is the income from your investments that count, not the actual investment. Either you can supply the department with a certificate of the actual interest accrued ( for instance, on a deposit account) or you can avail of a notional rate applied by the department. They will use whichever is the more beneficial for you.
On multi-year investments, such as savings bonds, you can either taken the full interest into account in the year it is paid or use the notional rate spread across the lifetime of the investment. And yes, your income on your An Post savings bonds does count, even if it is not liable for Dirt.
Stepchildren, in-laws and
inheritance
A number of years ago, I was informed that for the purposes of inheritance tax, son or daughter-in-law and a stepson/stepdaughter were equal to a son or a daughter. Is this correct?
Ms GL, Dublin
I think that is half right. As far as I am aware, a stepson or stepdaughter is treated in the same way as a son or daughter for the purposes of capital acquisitions tax – ie they are in category A and entitled (currently) to receive cumulative gifts/inheritance from a parent/step-parent of €225,000.
The situation for in-laws is different. Preference in CAT is given to blood relatives. Children (and step children, adopted children, or children of a civil partner) are category A. All other “linear” – ie blood – relatives are Category B, with a current threshold of €30,150. Everyone else – known as “stranger in blood” – is Category C, where the threshold is €15,075, including sons and daughters-in-law.
This column is a reader service and is not intended to replace professional advice. Please send your questions to Q&A, c/o Dominic Coyle, The Irish Times, 24-28 Tara Street, Dublin 2, or to dcoyle@irishtimes.com
