Money gift from uncle - what are tax implications?

C

Clara

Guest
My very dear uncle, who is more like a father to me (but not in the eyes of the law); has decided to give me a lump some of money. Region of about €60K

How do I find out what the tax implications to me for receiving this money are?

The money is currently based in South Africa. I am resident and domiciled in Ireland; but also have South African citizenship.

I think that these are the options:


  1. Gift the money to me directly in Ireland
  2. He can gift to me in South Africa and then I can send the money to myself from SA. - Would there be income tax on this even though I own the money in SA
  3. He could loan me the money?
  4. He could give the money to my mother to give to me - I think there is a Irish law that allows parents to gift money though I'm not 100% sure of this
What's the best way of working out the pro's and con's of each method to figure out which one is financially the best option?

Are there any finance/tax companies that would have experience in South African tax law?
 
congratulations on your impending gift.

As an Irish resident, this gift is within the charge to Irish gift tax regardless of who gifts it to you and where the gift occurs.

Under Irish rules, you can receive a total of €41,481 worth of gifts and inheritances from "group b" relatives (aunts, uncles, siblings, grandparents) before you are subject to tax. In addition, any time you receive a gift, the first €3,000 of any gifts from the same person in one year are disregarded. Where tax applies the rate (at present) is 25%.

In your case, if you have never previously received gifts from Group B individuals, you will only be subject to tax on €15,519 (the €60k gift, less the tax free threshold of €41,481 less the €3,000 gift exemption). The tax liability will then be €3,880.

You will be required to submit a CAT return by 31 October 2011 (presuming you get the money before 31 August 2011).

Having your uncle transfer the money to your mother first will not help as she will be subject to tax on the gift and although a higher tax free threshold applies to gifts from parents to children, the Revenue make "look through" a gift that is passed on within 2 years and deem it to come from the first person (so in this case, deem it to come from your uncle to you).

I can't help on South African tax.
 
Thanks for the reply. It sounds like I really need to speak to someone who knows both tax systems!
 
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