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Revenue plans tax crackdown on family gifts

REVENUE is planning a clamp down on tax exemptions for the payment of gifts from parents to their children.

A new Finance Bill has proposed placing a limit on the exemption to gift or inheritance tax to children aged under 18, or over 25 if they remain in full-time education.

The proposed law would mean that payments to an adult child, in excess of a yearly €3,000 threshold, would be liable to tax.

It could have wider ranging consequences for children who live at home out of economic necessity, with the possibility that the notional cost of renting a room at the family home could be taxed.


Tax experts have said that the invasive tax on families would require that they keep a ledger of the monetary value of gifts to their children.

And everything from the value of food, lighting, heating and other electricity costs could be factored in.

Also included in what could incur a tax implication are contributions to wedding costs, or the care of children by grandparents.

Arthur Cox solicitor Anne Corrigan said that there were difficulties with the proposals.

"There appear to be fundamental difficulties with this proposal and, if the specific exemptions are altered in the manner proposed, it is likely to lead to widespread dismay when its implications become known and fully understood," she told the Irish Times.

The proposed change concerns the Capital Acquisitions Tax Consolidated Act.

Support, maintenance or educational payments by a parent will not be considered as a gift or inheritance for tax purposes where it would be considered "normal expenditure" in the parent's circumstances.

The section states that such payment must also be "reasonable having regard to the financial circumstances" of the parent.

Revenue has said that the existing measure was "open to abuse and was being abused".

In some cases, tax exemptions have been claimed on gifts of cash or land with values up to €160,000, while cars and furniture have also been subject to exemption.

A Revenue spokesman said it was hoped that the tightening of the rules would protect the exemption from "spurious claims".


"There seems to be a significant risk that they will simply undermine the integrity of the tax system and that will be the case if they are put on the statute book only to be widely ignored in practice," Ms Corrigan said.

However Revenue has rejected this.

"Revenue will not be imputing a taxable value for those kinds of issues for people living in the family home."