Capital Acquisitions Tax - Guide to the CAT Treatment of Receipts by Children from their Parents for their Support, Maintenance or Education

Oct 1, 2026

Capital Acquisitions Tax (CAT) is explained as a charge on individuals who receive gifts and inheritances exceeding their lifetime tax-free threshold. The guidance details key thresholds effective from 2 October 2024, including the €400,000 lifetime parent-to-child threshold and the annual €3,000 small gifts exemption per parent. It also covers when payments for support, maintenance, and education may be exempt, applying “normal expenditure” and “reasonable” tests, and illustrates the rules with numerical examples.

LanguageEnglish

CategoryHealthcare

FormatPDF

Pages5

Reading Time13 min

AccessFree to download

Background

Lifetime Parent to Child Tax Free Threshold

Small Gift Exemption

Exemption in respect of payments for support, maintenance and education (position prior to Finance Act 2014)

Section 82(2) CATCA exemption scope

Conditions: normal and reasonable

Revenue’s interpretation

Capital Acquisitions Tax Guide to the CAT Treatment of Receipts by Children from their Parents for their Support, Maintenance or Education. [Section 82 Capital Acquisitions Tax Consolidation Act 2003 as amended by Section 81, Finance Act 2014] 1. Background 1.1 Lifetime Parent to Child Tax Free Threshold. Capital Acquisitions Tax (CAT) is a tax that imposes a charge on individuals who receive gifts and inheritances where the value of the gifts and inheritances exceed that individual’s lifetime tax-free threshold. As and from 2nd October 2024, a child is entitled to a life time taxfree threshold of €400,000 in respect of gifts and inheritances taken from his or her parents. Where the aggregate of the gifts and inheritances received by a child from a parent exceeds €400,000, only the excess is charged to tax. 1.2 Small Gift Exemption. In addition to this €400,000 tax-free threshold, the first €3,000 of gifts to a child in any year is exempt from CAT under the annual small gifts exemption. This means that each parent can give a gift to a value of €3,000 to a child (or to anyone else) each calendar year without any CAT charge arising. Two parents can make gifts to a child to the value of €6,000 in any year free of CAT. Indeed, two parents could, if they wished, gift €12,000 in total each year to each son or daughter and their respective partner (e.g. fiancée, fiancé, daughter-in-law, son-in-law) free of CAT. There is no obligation on a beneficiary of a gift to spend it in the year it is received. Gifts can be accumulated by the child after receipt to meet future expenditure e.g. to meet a deposit on a house. Gifts which qualify for the small gifts exemption do not reduce the parent to child tax–free threshold of €400,000 – gifts in excess of the small gifts exemption reduce the threshold after taking the exemption into account. Example 1 – Lifetime Parent to Child Tax Free Threshold | | Gift | Small Gift
Exemption | Tax Free Threshold
[400,000] | CAT Charge | | --- | --- | --- | --- | --- | | Year 1 Parent pays for holiday for child at a cost of €5,000 | €5,000 | (less 3,000 exempt) | Tax Free Threshold
reduced by €2,000 to €398,000 | NIL – in Year 1 | | Year 2 Parent gives child a
gift of €20,000 to buy a car | €20,000 | (less 3,000 exempt) | Tax Free Threshold
reduced by
€17,000 to
€381,000 | NIL – in Year 2 | | Year 3 Parent gives child a
gift of €100,000 as a deposit on a house | €100,000 | (less 3,000 exempt) | Tax Free Threshold
reduced by
€97,000 to €284,000 | NIL – in Year 3 | | Year 4 Parent gives child a gift of of €30,000 to replace a car | €30,000 | (less 3,000 exempt) | Tax Free Threshold
reduced by
€27,000 to
€257,000 | NIL – in Year 4 | | Year 5 Parent makes a gift of an apartment valued at €300,000 to child | €300,000 | (less 3,000 exempt) | Tax Free Threshold reduced to NIL | €13,200* in Year 5
(i.e. €40,000 @33%) | *CAT Charge on the Total Gifts of €455,000 in the example above is calculated as follows: Total Gifts Less Small Gift Exemption €3000 x 5 years Total Taxable Gifts Less Tax Free Threshold CAT Chargeable on CAT Charge €40,000 @33% = €455,000 € 15,000 €440,000 €400,000 €40,000 €13,200 Example 2. Small Gifts Exemption Both parents gift €3,000 to their child each year for 10 years, which the child saves. This amounts to €60,000 after 10 years. This amount can be used as the child wishes and is not subject to CAT – as the annual €3,000 small gifts exemption from each parent for each of the 10 years is not exceeded. In addition, the €400,000 lifetime tax-free threshold is preserved intact for use against larger gifts or inheritances. 2. Exemption in respect of payments for support, maintenance and education (position prior to Finance Act 2014) 2.1 Section 82(2) CATCA exempts from CAT money or money’s worth given by an individual (“the disponer”) during his or her lifetime for the support, maintenance or educati

FAQs

What lifetime tax-free threshold applies to gifts and inheritances from a parent to a child?

From 2 October 2024, a child is entitled to a lifetime parent-to-child tax-free threshold of €400,000 for gifts and inheritances taken from his or her parents. Only the amount exceeding €400,000 is charged to CAT.

How does the annual small gifts exemption work for CAT?

In addition to the €400,000 threshold, the first €3,000 of gifts to a child in any year is exempt under the annual small gifts exemption. Each parent can give €3,000 per calendar year without CAT charge arising, meaning two parents can give €6,000 free of CAT in that year.

When are payments for support, maintenance, and education exempt under section 82(2) CATCA?

The exemption applies to support, maintenance, or education provided during a disposer’s lifetime when it forms part of the normal expenditure for the circumstances and is reasonable having regard to the disposer’s financial circumstances. Revenue also interprets the exemption as covering support, maintenance, or education specifically, requiring at least some level of financial dependence by the child.

Oct 1, 2026

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