Gift Tax - CAT 1

What is Gift Tax?

Gift tax 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 and does not give full consideration for it.

The tax is payable by the person receiving the gift.

Typical examples of gifts include the following:

  • a present of cash
  • a present of jewellery or of a car
  • a transfer of a house or lands
  • a transfer of stocks and shares
  • the use of a house for life

How much of a Gift is Tax Free?

There are three tax-free thresholds. Each threshold depends on the relationship between the person receiving the gift and the person making the gift.

Different threshold amounts apply depending on the year the gift was made.

For the current and prior year thresholds see: CAT Thresholds.

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.

Example:

Anne took an inheritance of €30,000 from her grandmother in 2005. In 2008 she took a gift of €40,000 from her aunt. Both of these benefits fall within Group B above, therefore they are aggregated. As the first benefit of €30,000 was below the Group B threshold, no tax applied. However, when Anne took the gift of €40,000 her total benefits from Group B were €70,000 which exceeded the Group B threshold, and tax applied on the excess.

How is Gift Tax calculated?

All gifts and inheritances taken by a donee on or after 5 December, 1991 which fall within the same group threshold are aggregated to determine the amount of tax payable on the current gift.

See Aggregation Rules for Capital Acquisitions Tax below:

Tax and Duty Type - Aggregation rules for calculation of Capital Acquisitions Tax

Tax is charged on the market value of the property comprised in the gift. Deductions may be made from the gift for certain debts and expenses, together with any consideration paid by the donee for the gift.

The rates of tax are as follows -

The threshold amount          Nil
Excess                        33%

Is a gift of foreign property liable to Irish Gift Tax?

A gift of property situated outside Ireland is liable to Gift Tax only if the donor or the donee is resident or ordinarily resident in Ireland at the date of the gift. Property situated in Ireland at the date of the gift is liable to gift tax, irrespective of the residence status of the parties. Different rules apply in the case of gifts involving trusts which were in existence at 1 December, 1999.
Where a donor or a donee is domiciled outside Ireland at the date of the gift, he or she is deemed to be non resident, unless he or she has been resident in Ireland for five consecutive years prior to the year the gift was made.

Are there any exemptions from Gift Tax?

Yes. The main exemptions are -

  • the first €3,000 of all gifts taken by a donee from one disponer in any calendar year.
  • a gift between spouses or civil partners
  • a gift taken by a qualifying cohabitant by court order under the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 is exempt from Gift Tax.
  • a gift of a dwelling-house taken on or after 1 December, 1999 provided certain conditions are fulfilled. See further information below:
    Gift/Inheritance Tax Exemption for Dwelling-House
  • payments for support, maintenance and education of members of the family which are part of normal expenditure
  • lottery and similar winnings
  • gifts for public or charitable purposes.

Pictures, prints, books or other items which are of national scientific or artistic interest are exempt from gift tax provided certain conditions are fulfilled.

Who is liable for the payment of the Tax?

The person receiving the gift is primarily liable for the payment of the tax.

How do I file my return and pay my tax?

Gift Tax is a Self Assessment tax. The obligation to make a return to the Revenue Commissioners rests with the person who receives the gift. A IT38 Return (Inheritance Tax/Gift Tax Return) must be filed when a gift either by itself or when aggregated with prior benefits taken by the donee, exceeds 80% of the appropriate tax-free amount. Where a gift is made on or after 11 February, 1999, the donor is obliged to make a return in certain circumstances. Where the gift is made on or after 14 June 2010 and any relief other than the small gift exemption is claimed the IT38 must be filed online through ROS, Revenue's online service.

A guide to completing the return and paying the tax can be found at the following link:

IT39 - Guide to completing the IT38 return (Pay and File)

December 2012


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