Minister for Finance, Paschal Donohoe T.D., detailed in the Dáil that he does not expect to be in a position to increase the capital acquisitions tax small gift exemption beyond €3,000 due to the competing demands on the Exchequer. Section 62 of Finance Bill 2021, as initiated, proposed amendment to section 40 CATCA 2003, which would have seen a change to the way in which a liability to tax on the free use of property, free loans etc., is calculated and potentially cause those in receipt of free loans etc., to exceed their annual small gift exemption threshold. Minister Donohoe later decided not to proceed with section 62 of the Bill, as the proposal is said to require greater consideration.
Last Tuesday, 9 November, Minister Donohoe detailed in his response to parliamentary questions that the €3,000 small gift exemption threshold was last changed in Finance Act 2003. The Minister noted that an increase in the small gift exemption to €5,000 is estimated to cost the Exchequer €1.1 million.
At present the liability to tax on the free use of property, free loans etc., is calculated with reference to deposit rate such funds could earn. Under the Finance Bill 2021 (as initiated), the reference rate was potentially set to change to be the best rate a borrower borrowing an equivalent amount in the open market could expect to pay. However, Minister Donohoe has since decided not to proceed with section 62 of the Bill as he believes greater consideration needs to be given to the proposal.
Norah Collender spoke with the Irish Independent earlier last week on the potential additional administrative burden this proposed changes would have created.
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