Capital Aquisitions Tax - does it apply?

Over the past two years a close friend has been helping me financially, €500 every month. This was due to huge family problems on my end, and the inability to work.

It has been brought to my attention that these payments may be subject to capital aquisitions tax. How does it work?

500 a month for 12 months = 6,000 per year - gift threshold is 3,000 a year tax-free so it's possible that tax is due on 3,000.

But is this a gift, a loan?

Well at the time it was merely a gift I suppose, for financial help. I never saw it as a "gift" as such, because it was what kept me under a roof at all.

Flotsam said:

Well at the time it was merely a gift I suppose, for financial help. I never saw it as a "gift" as such, because it was what kept me under a roof at all.

Click to expand...

What the above poster is asking is will it be repaid?

If you haven't received any other gifts or inheritances in the past, no tax is due yet, as 3000 per year (6000 - 3000 exemption) for 2 years is still below the threshold for gifts/inheritances from a stranger. Also 3000 exemption applies per calendar year, so if your friend started helping part way through a calendar year, even more than 6000 may be exempt.

However, if this financial help continues, you will become liable to gift tax eventually.

If you are married, your friend could split his gifts between you and your wife, then 6000 per year will be exempt (3000 x 2).

The same effect can be achieved, if you receive half the gifts from your friend and half from the friend's wife.