Make the most of your gift with the small gift tax exemption
‘Tis the season of goodwill and giving thanks. But did you know you can gift up to €3,000 tax free to any one person? Just don’t forget to do it by 31 December to use this year’s allowance.
As people are finalising their Christmas lists did you know that any individual may receive a gift up to the value of €3,000 from any person in any calendar year without having to pay Capital Acquisitions Tax (CAT)? This means that parents can gift each of their children €6,000 per annum tax free.
The same applies to grandparents. So if two grandparents gift €6,000 per annum over the next 10 years their grandkids can have a fund of €60,000. That’s a pretty good start for them and the plus side is there are no tax implications.
There are lots of way to do this but documenting this is key to avoid any tax implications down the road. It can be as simple as setting up an online account in the individual’s names, some of the internet banking facilities even allow you to identify the purpose i.e. gifting.
There are other ways also, buying shares, buying assets etc. for individuals, but remember they need to be the owner / beneficiary. Letting someone live rent-free in your property is also a gift! Make sure you are not inadvertently gifting.
It’s definitely worth planning your giving. Avail of the tax relief, document the gift and mostly enjoy the feel good factor of helping someone or a deserving cause.
If you are donating to a charity this Christmas (or at any time) read our article The Charitable Donation Scheme – make the most of your donation.