James receives an interest free loan of €500,000 from his father on 01 January 2024. The highest 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.
Calculate taxable value
|Multiply by highest rate of return
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 the taxable value of the gift is €4,500. This will count towards James' Group A threshold.
Assuming James has not used any of his Group A threshold, no tax liability arises in relation to the gift. The taxable value of the gift does not exceed 80% of his Group A threshold and ordinarily he would not be required to file a CAT return.
However, from 01 January 2024 he will be required to file a CAT return for each year the loan is outstanding.