Hiya, Firstly, I don’t think there is a custodian account available in Ireland yet? So if you invest on your child’s behalf in your own name then all the same taxes apply ie: you incur and file/pay the CGT/Income tax on dividends or Exit taxes/deemed disposals as normal until you sell and gift the money to your child. So no tax-free growth, unfortunately. Once the money is in your child’s name, if they invest it in their own account then they incur and file/pay the relevant taxes from there.

Yes unfortunately capital acquisition tax is like double taxation as you will also have paid CGT/income tax on dividends or exit taxes/deemed disposals on the growth.

If you have more than a million to pass onto your children it might be worthwhile looking into getting a trust set up as it can be more tax-efficient but the costs are quite high so that’s why you need quite a bit to justify the costs.

And no the 140 child benefit is not taxable as far as I know. Hope that answers your question?

he will get the money from his parents by paying CAT or within the limit.
he invests the money for growth using his investment account, then on CGT, he needs to pay tax right?

or else instead of giving gifting money, we need to gift 6k worth of shares(capital asset).
let’s say, he received the gift in terms of a capital asset(shares) by triggering CAT or else within the limit of CAT. now if he realizes the gain after some year, he no needs to pay CGTtax/Exit Tax, since he already came through CAT.

you mean to say, if they apply CAT and CGT/EXIT Tax, double taxation applies, that is not tax implication in Ireland.

and also 140 child benefits will not be added to our income for taxation purpose?

Hi Sean, Thanks for your comment. Unfortunately no, I have not yet found a custodial account. In terms of CAT, I believe the exit tax of 41% on gains and dividends in an ETF are separate from CAT and so in a sense would be doubly taxed. Which makes it even more pressing to find a custodial account so that you can avoid having to pay both the exit tax and the CAT.

Same thing goes for inheritance tax. If you’re investing in a non-pension account you will have paid income taxes on the initial invested amount, exit taxes on the gains and dividends and then if someone inherits the account when you pass, they will also pay inheritance tax on the total amount once it exceeds their lifetime limit.

So the government makes passive income off your investments while you take all the risk :(. They have it all worked out!

Thanks for the brilliant overview. Just wondering if you have managed to find a custodial account for investing?
With regards to not triggering CAT, if you have invested in ETF’s outlined in a previous blog, these are taxed every 8 years. Therefore, would the tax not already have been paid?

Oh excellent thanks for letting me know, I’ll update the post