Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

As the Deputy will be aware, the small gift exemption is an annual CAT relief available to all recipients of gifts. This means a person can receive a gift to the value of €3,000 free of CAT. For example, a parent may give a gift up to the value of €3,000 to a child or anyone else each calendar year without any CAT arising. Two parents can make gifts of €3,000 each to a child, resulting in a gift to the value of €6,000 in any year free of CAT. It should be noted that there is no limit on the number of small gifts a person can receive in a year from different donors. The Finance Act 2003 increased the small gift exemption threshold from £1,270 to the current threshold of €3,000. This was the most recent increase to the small gift exemption threshold.

A wide variety of further exemptions and reliefs from CAT and capital taxes more generally are also available. In particular, for a gift from a parent to a child, CAT is only paid on the value of cumulative gifts above a lifetime tax-free threshold of €335,000. In other circumstances, including where gifts or inheritances are given by a grandparent to a grandchild, or gifts between siblings, CAT is only paid on the value of the gifts or inheritances above a lifetime threshold of €32,500. A tax-free threshold of €16,250 applies for instances of gifts or inheritances between individuals with relationships not covered by the other thresholds. Details on these thresholds are available on the Revenue website.

“Lifetime” in this context means any gifts or inheritances received after 5 December 1991.

Additionally, numerous other generous capital tax reliefs are available if a person meets the qualifying criteria. These include agricultural and business relief, which, subject to certain conditions, reduce the taxable value of the farm or business assets being passed on to a child on by 90% and dwelling house exemption, which provides an exemption from CAT on the inheritance of certain dwelling houses subject to the beneficiary meeting the qualifying criteria.

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