Making the most of the small gift exemption
The small-gift exemption allows anyone to gift up to €3,000 in any tax year to anyone else
I know that you have dealt with queries on the above subject many times and may wonder at another but mine is this. If a parent gifts €3,000 to an adult child in a single year, may that same child receive a similar amount from say, a sibling, grandparent, aunt, within the same year? Can this pattern be repeated any other year?
Ms E.C., email
The simple answers to your question are: yes, and yes.
The small-gift exemption allows anyone to gift up to €3,000 in any tax year to anyone else. And, having done so, there is nothing to preclude them gifting the same sum to the same people the following year, or to different people.
Of course, in general, people aren’t dishing out money to total strangers. It is generally a device for gifting within enlarged families – from parents/grandparents to children or grandchildren, aunts and uncles to nephews and nieces, or even among cousins or siblings. Clearly it is a very tax efficient way of helping family members over small financial crises, or those saving up for things like mortgage deposits.
Where Revenue will definitely get shirty is where they believe the gift is not actually destined for the recipient. If, for example, someone is saving up for a mortgage and each parent gifts them €3,000 in a given tax year, that is fine.
However, if the parents also gift €3,000 each to that person’s brothers or sisters and the siblings, in turn, gift the money to the person saving for a mortgage, the Revenue will deem it an abuse of the small gift exemption and all money gifted to the person saving for a home from the siblings will be considered to be a gift within category B – which imposes a lifetime cumulative limit (from December 5th, 1991) of €30,150. Anything above that limit will be taxed at the prevailing rate – currently 33 per cent.
That aside, there is nothing to stop different relatives – a parent, sibling, aunt or grandparent, as in your question – all gifting up to €3,000 in a tax year to a particular individual, say one of your children. And there is nothing to stop each or any of them doing the same in subsequent tax years. Many families do precisely that as part of estate planning to reduce eventual exposure to capital acquisitions tax on an inheritance, which also has the advantage of giving younger people access to money when they need it to start their independent lives rather than at a later point when a relative eventually passes away. Vodafone calculations I didn’t understand all the calculations in your article recently – old age maybe! I hold 380 new shares after restructuring. To sell them, you say: “you need to achieve a price higher than €4.58”. At present, they are quoted at £2.06 . Where would I get €4.58?