Éamon Ó Cuív Questions Gift Tax Threshold, Proposes €5,000 Increase
Éamon Ó Cuív challenged the minister on the small annual gift tax threshold, noting it was last changed in 2003 and arguing that non‑indexation effectively raises taxes. He proposed increasing the exempt gift amount to €5,000 and sought the cost to the Exchequer.
When the threshold was set
The Deputy asked when the annual gift threshold was last changed; the minister replied it was set in section 149 of the Finance Act 2003 and has not been altered since then.
Argument on non‑indexation and impact on families
Éamon Ó Cuív argued that leaving thresholds unchanged amounts to an increase in tax over time because inflation reduces their real value. He said many parents give modest gifts to children in times of crisis or to help with childcare and furnishing a first home, and expressed concern about bureaucratic paperwork on small gifts.
Proposal to increase the exemption and cost estimate
The Deputy suggested raising the annual exempt gift to €5,000 to restore its real value since 2003. The minister responded that an increase to €5,000 would cost the Exchequer approximately €1.1 million and said he was not in a position to change it in the recent budget.
Tax take and next steps
The minister described the change as a very low share of the total tax take and acknowledged the point that the threshold has not been updated for some time. He did not provide a commitment for the next budget, noting they were still dealing with the finance bill for the current year.
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One of the ways of increasing taxes is to leave tax thresholds the way they were. There was a threshold introduced some time ago that you could give a gift to a child of €3,000 per annum, and it was not accessible as part of a lifetime gift to that child in terms of inheritance or gift tax. My question is twofold. When was that threshold set, and is it intended to increase the threshold? Thank you, Deputy, for your two questions. That threshold was last changed in 2003, I should say, in section 149 of the Finance Act of 2003. The Deputy will be aware of what the operation of it is, so I'm not going to read it out to you. It was set in 2003. I don't at this point have any plans to change it further, but I am aware of the role that it does play in supporting families in gifts that they do make from a parent to a child. But with all of the other competing demands that are there on the Exchequer at the moment, I wasn't in a position to change it in the recent budget. As I pointed out, not increasing thresholds, it is actually increasing taxes. The Minister might tell me, what is the increase in the consumer price index since 2003? In other words, the real value of a gift. Would the Minister not agree with me that many parents give gifts to their children at a time of crisis for their children or at a time when there are some childcare costs or child costs that were unforeseen or when they get to get their own property and maybe to furnish it and so on? It seems to me that it is an awful lot of bureaucracy if a parent gives £4,000 or £5,000 that they have to then start making a whole lot of tax returns for that £2,000 over a lifetime. I am not saying the person would ever actually reach the threshold. They might never actually have a tax liability because the gift tax threshold I think is £335,000, but it is all this paperwork for very little merit. I was wondering, would you not consider increasing it to say a modest £5,000 taking that that would probably only give you the real value of what was there in 2003? The Deputy O'Keeve is correct that the non-indexation of different thresholds more often than not leads to an increase in tax revenue. You are correct. What has been the change in inflation since the last change was made in 2003? Well, the change in inflation in the last few years alone would mean that the real impact of that threshold has now increased, given that it has been left unchanged. I cannot at this point give the Deputy an indication as to what will be in next year's budget. We are still dealing with the finance bill for this year's budget, but as I said, I was not in a position to make a change for this year. But I do accept that because it has not been changed for some while, it is now covering off a larger share of any gifts that might be made at the moment from parents to their children. Mr. Minister, would you have any idea what an increase to €5,000 would cost the Exchequer? Yes, I would. An increase to €5,000 would have an approximate cost of €1.1 million. If you do not mind me, since I asked you a very short question, can you just outline, because this is just going to ordinary people giving a gift, because lots of parents know our supporting children. Could you give me an outline just of what is the total tax take of the state? Well, I gave a short answer to your first question and I will give a short answer to the second one as well. Of course, it is a very, very low share of the total amount of tax that we take in. I accept that it has not been changed for some while, and I thank you for bringing it to my attention. Thank you. Thank you very much, thank you so much forPROOOO and I thank you very much for your 알
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