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Completing your gift or Inheritance Tax return (IT38)

  1. Overview
  2. Filing obligations
  3. Filing obligations for certain interest free loans
  4. How do you file?
  5. File additional benefits or amend a filed return
  6. Expressions of doubt
  7. How to pay your Capital Acquisitions Tax (CAT)
  8. What is a disclaimer of a benefit?

Filing obligations for certain interest free loans

When is an interest free loan reportable?

If you receive a gift in respect of a specified loan, you may have to file a Capital Acquisitions Tax (CAT) return.

A specified loan is any loan, advance or any form of credit that is:

  • received by you from a close relative
  • received by you from a company of which a close relative is a beneficial owner
  • made by a close relative to a company of which you are a beneficial owner
  • or
  • made between two companies where:
    • you are a beneficial owner of the borrowing company
    • and
    • a close relative is a beneficial owner of the lending company.

Note

A close relative is someone related to you for the purposes of either the Group A or Group B thresholds.

You will have to file a CAT return where:

  • you are deemed to have taken a gift for CAT purposes in respect of a specified loan
  • no interest was paid on the loan within 6 months of the end of the year of that gift
  • and
  • the combined balance on the loan and any other specified loan exceeds €335,000 in the year.

What information will you need to provide

If you have to file a CAT return on receipt of a gift in respect of a specified loan, you include:

  • the name, address and tax reference number of the person you received the loan from
  • and
  • the balance outstanding on the loan.
  • Example

    James receives an interest free loan of €500,000 from his father on 01 January 2024. The best rate of return he could receive from an investment on deposit on this amount is 1.5%. The loan is still outstanding on 31 December 2024 and no interest is paid on the loan within six months of that date.

    Calculate taxable value
    DescriptionValues
    Loan value €500,000
    Multiply by best rate of return 1.5%
    Taxable value €7,500

    For CAT purposes James is deemed to take a gift of €7,500 from his father on 31 December 2024. After allowing for the small gifts exemption of €3,000, the taxable value of the gift is €4,500. This will count towards James' Group A threshold.

    James has not used any of his Group A threshold, so no tax liability arises in relation to the gift. As the taxable value of the gift does not exceed 80% of his Group A threshold, ordinarily he would not be required to file a CAT return.

    However, as the loan comes within the scope of the new reporting requirements, James will be required to file a CAT return for 2024. He will also be required to file a CAT return for each subsequent year that the loan is outstanding and the criteria for reporting are met.

Next: How do you file?

Published: 21 October 2024 Print this page

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