Is a loan from a family member subject to tax?

Q&A:Are there tax implications when a person gets a loan with or without interest from a family member?

Mr PB, Galway

In general, loans between family members are conducted on an informal basis. That being the case, it is rare that they come to the attention of Revenue.

If the loan is interest-free, Revenue is unlikely to be interested; however, if interest is being paid, then there is income accruing to the family member making the loan and that should be declared as income to the Revenue in an annual return.

Do I have to tell Revenue about sale of shares?

In relation to tax rules when capital assets, specifically shares, are sold:

1. Is it necessary to notify Revenue when the gain in one year is less than the allowed annual gain of €1,270?

2. Is it necessary to declare an actual annual loss to Revenue in order to carry over that loss?

3. Can a loss be carried forward for more than one year?

Mr GR, Dublin

Many people who sell small holdings of shares at a profit that is below the personal exemption threshold or, worse still, at a loss tend to feel that they do not need to inform Revenue as there is no tax owing. However, that is not the case.

Revenue requires that a return be made in relation to any disposal of shares (or any other capital asset) regardless of whether a gain is made. If you file an annual tax

return, the details can be included in that submission.

If, like many small shareholders,

especially pensioners, you do not generally file a tax return, you are obliged to file a capital gains tax form CGT1, giving details of any gain or loss on the shares. This form must be returned by October 31st of the year following the year in which the transaction took place.

This submission deadline is very different for the deadline for payment of any tax owing – if that is the case, liabilities for sales in the first 11 months of the year must be settled by December 15th while any gains in the last month of a year have to be paid by the end of the following month (January of the year after the gain arises).

The CGT1 form will allow you to file details of the transaction, any gain arising and whether that falls under the €1,270 annual exemption threshold.

It also allows you to detail any losses arising on transactions in that given year.

The importance of that is that losses can

be carried forward; clearly, Revenue will want to know how such losses arose in the first place.