Taxation of Child's Income

S

Swyper

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If a child, under 18, is in receipt of their own independent income from assets (inherited or built up through annual gifts) such as interest or rent, do they need to.submit tax returns independently from their parents? And do they then get full personal tax credits etc.?
 
Yes , I’m my opinion they do.

They would be required to file a tax return in their own right independent of their parents. They would have the same rate band and credits as a single person .. they would be required to do so under the self assessment system ..

The issue generally does not arise as children generally have no asset / income.
 
Mary55555 said:
Yes , I’m my opinion they do.

They would be required to file a tax return in their own right independent of their parents. They would have the same rate band and credits as a single person .. they would be required to do so under the self assessment system ..

The issue generally does not arise as children generally have no asset / income.
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+1
 
Thanks. The exact situation is a grandparent has been gifting 3000 euro per annum to 3 grandchildren for a few years. This has built into a tidy sum for their future education. Some is invested in a fund where interest is paid without DIRT and so ordinarily, if this were an adult, a tax liability would arise - tax credits notwithstanding. There is nothing revocable about this investment or the income from it. It's not some kind of tax avoidance / evasion scheme.
 
From the Revenue website - unless the have a massive fund they should be OK
You should register for self-assessment if you:

You can register for self-assessment by using the eRegistration service or by completing Form TR1.

You do not need to register for self-assessment if:

  • your taxable non-PAYE income does not exceed €5,000 and your gross non-PAYE income does not exceed €30,000, and this income is taken into account in calculating your tax credits and standard rate cut-off point for PAYE purposes. In this case, you must submit a Form 12 online through PAYE Services in myAccount.
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Swyper said:
No, not subject to exit tax.
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How is this the case, if it's invested in a fund?

Exit tax is only deducted on each eighth anniversary (or when the fund is cashed in, if earlier) so while there may be no Exit Tax being paid out at present, it will hit them on the eighth anniversary.

I'm aware of a small number of Exchange Traded Funds (ETFs) that were in the realms of Income Tax and Capital Gains Tax rather than Exit Tax for reasons of domicile.

Other than that, I'm not aware of any funds that are exempt from Exit Tax.

Just curious.
 
LDFerguson said:
How is this the case, if it's invested in a fund?

Exit tax is only deducted on each eighth anniversary (or when the fund is cashed in, if earlier) so while there may be no Exit Tax being paid out at present, it will hit them on the eighth anniversary.

I'm aware of a small number of Exchange Traded Funds (ETFs) that were in the realms of Income Tax and Capital Gains Tax rather than Exit Tax for reasons of domicile.

Other than that, I'm not aware of any funds that are exempt from Exit Tax.

Just curious.
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Linked Finance.
 
RedOnion said:
Are the funds actually in the child's name?
A child can't enter into the kind of contract required for something like Linked Finance.
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No, it's held in a parent's name, but they are the beneficial owners. Similar to any child bank account you open.
 
So I can't transfer my apartment to my children and bank the rental incoming in there name for late use? I ask as I maybe returning to Ireland and the 20% tax I pay on the rental income now will go up to the higher rate of income tax. :(
 
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