Q&A

Dominic Coyleanswers your questions.

Gift tax liability on joint accounts

I am considering opening one or more savings accounts for "regular savers" jointly with my son, who is not currently in a position to make any savings. If I contribute €300 a month, this adds up to more than the amount that can be given in any one year free of gift/inheritance taxes, and this will be especially the case if I open more than one of these accounts.

If I make the contributions and my son eventually draws them out, either before or after my death, do they count against his inheritance tax liability?

Mr T.K., Dublin

If you make a contribution to an account, the beneficial owner of which is your son, then the issue of gift tax does come into the equation.

Equally, if your son were to draw down the sum after your death - when the account

would form part of your estate - then an inheritance tax liability could arise.

However, if you are considering monthly contributions of €300, you will be barely above the annual €3,000 threshold on gifts from any person to any other that is exempt from consideration

in relation to capital acquisitions tax, the heading that covers both gifts and inheritances.

At €300 a month, annual contributions to an account would be €3,600. That's just €600 a year over the exemption threshold and would hardly eat heavily into a parent-to-child inheritance tax threshold of €478,155.

Of course, the more accounts you set up, the higher any tax liability for your son.

It is also the case that if this is a joint account, where both of you share beneficial ownership, only half of each contribution would count as a gift towards your son.

Age limit on SSIA pension incentive

I am 76 years old, with a private pension since I became 70, now grown to €25,000 per annum and a social welfare pension of €4,100 per annum. My SSIA matured recently. Can I avail of the €1 for €3 scheme either with the company which pays my annuity or with any other similar institution?

Mr C.M., Dublin

I am afraid you cannot avail of the €1 for €3 bonus scheme introduced by Minister for Finance Brian Cowen in the Finance Act as you are over 75.

The incentive was designed to boost pension savings. It was certainly open to people who were already pensioners - notwithstanding the efforts of the Revenue and the pensions industry to frustrate this.

For people already on a pension, the easiest way to avail of the scheme was to open a Personal Retirement Savings Account (PRSA). Subsequent measures introduced by the Minister to prevent abuse of the scheme meant such a PRSA would have to be held for a minimum of one year.

While your income falls within the limits set down by the Minister, people can only open a PRSA up to the age of 75, so you fall outside the scheme.

There has been a lot of confusion on the incentive - not helped by disinformation on the part of some PRSA providers. The Pensions Incentive Tax Credits scheme (PITCs) - as the initiative is called - has been operating since last June, just after the first SSIAs matured.

In general, to avail of the bonus, people needed to transfer the money to a pension fund within three months. However, the Revenue has extended this several times.

Last month, a further extension was granted and people whose SSIAs have matured to date have until the end of December to transfer funds to a pension under the PITCs scheme.

It's little consolation to you, but the latest extension should help a large number of people maximise their SSIA.

• Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail dcoyle@irish-times.ie.

This column is a reader service and is not intended to replace professional advice.

Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.