From January 2024 a mandatory filing obligation is imposed on the recipients of certain loans from close relatives.
It applies to existing loans and new loans made since January 2024.
A Capital Acquisition Tax return must be filed by a person who is deemed to have taken a gift in respect of the use and enjoyment of a specified loan made by a close relative.
It is deemed that a person has received the benefit on 31 December each year so the return must be filed no later than 31 October the following year.
The earliest return filing date is 31 October 2025.
Generally a close relative is related to the loan recipient as:
- a parent
- the civil partner of a parent
- a lineal ancestor
- a lineal descendant
- a brother or sister
- a brother or sister of a parent
- a brother or sister of the civil partner of a parent.
Look through provisions will be applied to loans made by or to private companies to determine if the loan is ultimately being made to a recipient by a close relative.
The holding of any shares in a private company is sufficient for the look through provisions to apply.
A loan is any loan, advance or form of credit and need not be in writing.
All specified loans must be aggregated from various close relatives to determine if the threshold amount of €335,000 has been exceeded. If interest has been paid on any of the loans they need not be included.
The recipient must file a return if:
- he/she is deemed to have taken an annual gift in accordance with Section 40(2) CATCA 2003
- no interest has been paid on the loan within 6 months of the end of the relevant period in which the gift is deemed to have been taken and
- the balance outstanding on the specified loan(s) exceeds €335,000 on at least 1 day.
The Section does not specify any minimum amount of interest to be paid and not just accrued. Interest should be paid in each relevant period, and not just on a once off basis, for a loan not to be reported in respect of that period.