Revenue rules that annual small gift exemption must be actually given and not just "earmarked".

P

Philip S

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Interesting article in the independent;
(https://www.independent.ie/irish-ne...espite-communion-money-claims/a845644263.html)

I would tend to agree with the ruling here that the small gifts from parents was retrospective issue and not something done over time.

if it was me I would either have the money in a separate account purely for the child if reason he cant have in own name or set up account in the child's name.
If the gifts were genuine i would expect better planning and records from someone in the legal profession.
 
Very interesting article. I have tried to summarise it in a revised title to the thread.

These payments were not made by the transfer of money to a separate account in the name of the son but rather the Appellant’s father stated in evidence that he and his wife “earmarked” money in their joint account for the benefit of their son.

We could all do that. If I wanted to give a friend €60k I could claim to have earmarked €3k a year for him for the last 20 years.

Brendan
 
A fascinating case. The parents seem to have been contending that an oral trust existed. The Appeal Hearing found their argument wasn’t credible. There’s no issue with the monies being held in the parents’ account but commonsense would dictate that you’d document that at the time and with a Trust Deed. I have zero sympathy for them.
 
Very interesting. I wonder if the ‘Bank of Mam & Dad’ will be investigated also. They usually draft up a letter outlining its a loan being given towards the purchase of a house. Will repayments be looked at?
 
My reading of the article is that if the father had a dedicated bank account not necessarily in the name of the son it might have worked. Maybe I'm misinterpreting
 
Our kids often get cash gifts for Christmas, birthdays etc and Catholic sacraments tend to be very good earners for the kids
It's simple to get an account set up and lodge as and when gifts are given. We actually sometimes get asked for account details for direct lodgement to make it easier. And believe me kids are excellent record keepers themselves, if I ask to borrow from their cash stash for incidentals they make sure i return it! So no excuses for this case, they clearly wanted to transfer money and made up reasons why after the fact.
 
Of course as Revenue accelerate the abuse of technology I assume we will have to make a return as you pay.
 
If a parent 'gifts' a child/children the €3000 per annum currently permitted, does the parent need to make a record of this on their (parents) annual tax return?
In the case where both parents are alive, can both parents gift each child the maximum of €3000 each year?
 
So it's ok for the parents to keep the money in their own accounts as long as they do two things. Document it somehow and also do up a Trust Deed. I suppose if you documented it doing a CAT return of 3K annually that would meet revenue rules.
 
Documenting the money is key.

Regular saver plans under trust has become extremely popular with parents gifting €3,000 each to a plan for a child. Grandparents are also adding money into these accounts, which has to be done through the trustee. I always tell the parents to have a signed note on file that the money is coming from the grandparent to their child as a gift.

As far as I am aware, Revenue are not coming after smaller donations but as bare trusts become more widely used and there is more transfer of wealth from the baby boomer generation, Revenue may turn their attention to the transfer of assets among family.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Bronte said:
So it's ok for the parents to keep the money in their own accounts as long as they do two things. Document it somehow and also do up a Trust Deed. I suppose if you documented it doing a CAT return of 3K annually that would meet revenue rules.
Click to expand...
Pretty much. If I ring-fenced €100k in my account today, documented that I was gifting it and holding it in bare trust for my kids, and got you and Steven to witness it, we’d be bulletproof in a case such as that. My understanding is that the guy was arguing that by simply thinking it, that was enough.
 
Extract from a technical guide on this subject by one of the product providers. They use a deed of assignment (if U-18) as opposed to a trust.

Section 5 of the Capital Acquisitions Tax Consolidation Act 2003 (CATCA 2003) sets out that a person becomes chargeable to CAT on a gift when a person becomes “beneficially entitled in possession, otherwise than on a death, to any benefit (whether or not the person becoming so entitled already has any interest in the property in which such person takes such benefit), otherwise than for full consideration in money or money’s worth paid by such person.”

Therefore, to become chargeable to CAT the following criteria must exist:

1. There must be a beneficial entitlement

2. It must be in possession

So, no way is 'earmarked' in possession of the recipient.

A grandparent isn't allowed to transfer money into a policy that's set up by the parents under this assignment method. They would have to create a separate plan.
 
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