A child has a lifetime tax free threshold of €225,000 (as at 2015) in respect of gifts and inheritances taken from their parents.
In addition the first €3,000 of gifts to a child in any year is exempt from CAT under the annual small gifts exemption.
Section 82(2) of the Capital Acquisitions Tax Consolidation Act exempts from CAT any monies a parent gives for the support, maintenance or education of their children. This has been amended by Section 81 Finance Act 20114 to confine this relief to:
- a minor child or civil partner
- A child who is over 18 years of age but not more than 25 years of age who is receiving full time education or instruction at any university, college,school or other educational establishment. The child is required to devote the whole of their time to such training for a period of not less than two years.
- A permanently incapacitated child who by reason of physical or mental infirmity is not able to maintain themselves.
The Revenue takes the view that the cost of a family function such as a wedding is an expense of the parent rather than a gift to the child. Therefore there are no CAT implications. This includes not only the cost of catering but all of the costs associated with the occasion. However a gift such as a car , a house or a paid holiday is still a gift for gift tax purposes even if it is linked to the family occasion.