From Revenue's guide IT 39 on CAT :-
For gift tax only - did the disponer take any gift within 3 years prior to, or since, the date of gift entered in
Part 3 above?
Indicate by ticking (
) “yes” or “no” as appropriate.
This question relates to an anti-avoidance provision in section 8 of the Act, which is designed to prevent “gift splitting”.
Gift-splitting is best explained by way of an illustration. Where Disponer (B) makes a gift to Beneficiary (C) and in the three
years prior to or since making the gift to Beneficiary (C), Disponer (B) had taken a gift from another disponer, Disponer (A),
then the gift taken by (C) is deemed to have been taken from (A) and not (B).
Example
In January 2002 a father, Disponer (A), gifts to his son (B)
£500,000. In October 2002 the son, Disponer (B), gifts to his wife,
Beneficiary (C), a house valued at £500,000. The wife, Beneficiary (C), is deemed to take the gift of the house from her
father-in-law, Disponer (A) and not from her husband, Disponer (B).
In the above example, in the absence of this anti-avoidance provision, the gift by (B) to his wife (C) would be exempt from tax,
even though, in reality she is taking the gift from her father-in-law (A).
However, where it can be shown to the satisfaction of the Revenue Commissioners that the gift in January 2002 was not made
with a view to facilitating the making of the October 2002 gift, the October gift is treated as being made by (B), the spouse of (C).
A typical example of this scenario would be as follows:
Father transfers house to married son in May 2002. Son requires a mortgage to renovate the house or to build an extension.
The lending institution would probably insist on the house being placed in the joint names of the son and his wife before
advancing the loan. The son transfers a half share of the house into his wife’s name in June 2002. Under the provisions of
section 8, the wife would be deemed to take the half share of the house from her father-in-law but in these circumstances
Revenue would most probably accept that the first gift, i.e. transfer from father to son was not made to facilitate the second
transfer, i.e. son to spouse.
