1. Small Gift Exemption:

Capital Acquisitions Tax / Gift Tax legislation allows for an exemption from Gift Tax for the first €3,000 of any gift taken by a beneficiary from any one ‘donor’. The €3,000 is an annual limit. What this means is that a beneficiary can receive up to €3,000 tax free in any one year from any donor, or even multiple donors, and this gift will not impact on their appropriate tax free group threshold.

2. Disposing of business assets:

When business assets are disposed of, either through sale, gift or inheritance, a number of different tax charges may arise.

• A Capital Gains Tax charge may be incurred by the person disposing of the assets, even if the assets are being given as a gift. The current CGT rate is 33%.
• A Capital Acquisitions Tax charge may be incurred by the recipient of the gift or inheritance or where the sale price is below market value. The current CAT rate is 33%.
• Stamp duty is also payable on the lifetime transfer of assets.

Different relief’s are available, which if applicable can reduce these
tax charges.

• Retirement Relief from Capital Gains Tax
• Business Relief from Capital Acquisition Tax
• Consanguinity Relief from Stamp Duty (to be abolished 01/01/2015)

 3. Funding for a Gift Tax Liability

You can create a fund that can be used to pay a Gift Tax liability. The benefit of using a ‘qualifying’ life assurance savings plan to fund for the payment of gift tax is that, as long as certain conditions are met, the proceeds of the plan when used to pay your children’s gift tax bill will not increase their gift tax liability.If you give your children money to pay the gift tax from your deposit account, this will be seen by Revenue as an additional gift and will actually increase their tax liability.

4. Approved Retirement Fund

If you purchase an Approved Retirement Fund, it may create an Inheritance Tax liability for your children:

• Children under 21 – Inheritance Tax
• Children over 21 – Income Tax at 30%

As always if you have any questions in relation to inheritance tax please do not hesitate to contact a member of the Stability Financial team today.