How much can we gift our children tax-free?

Q I AM wondering if each parent can gift €3,000 a year tax-free to their children? I was told only one parent is allowed. Are such gifts counted in the current €335,000 inheritance threshold, free of Capital Acquisition Tax (CAT), to which each child is entitled? And are those thresholds likely to increase over the coming years? Dave, Limerick

A Those inheritance thresholds are rumoured to rise in every budget but it has never materialised. Back in April 2009, that threshold was €542,544! The thresholds may increase again – it is only fair but, of course, it will also depend on politics. You can gift not just your child but any person, including me, the sum of €3,000 each year tax-free under the Gift Tax Exemption legislation. This is completely separate from the inheritance thresholds and is NOT included in any aggregate. The three Capital Acquisition Tax thresholds are: A- PARENT TO CHILD (€335,000) B - GRANDCHILDREN, NEPHEWS/NIECES, BROTHERS/ SISTERS (€32,500)

C - ALL OTHERS (€16,250), INCLUDING ME… There are other groups within these categories which you can check at Revenue.ie/en/tax/cat/thresholds.html. So to simplify it, Dave, you can give anyone €3,000 every year, plus €16,250 as a gift and an inheritance from you. Your wife can also give €3,000 every year but remember, with inheritance, aggregates count – a second aunt gifting you €32,500 will result in a CAT liability for you of €10,725. If the parents are divorced, the child can benefit from the inheritance only ONCE as both would not be allowable and NOT double the threshold, which is currently, as you say, €335,000 – provided, of course, they have the assets to bequeath.