I am a retired American teacher whose son, daughter-in-law and grandson live in Dublin. My son and I have Irish passports. I'd like to gift up to the allowed maximum annually in Ireland.

My son and she have not married but my son's name is on baby's birth certificate . . . and surname on passport too. Can you advise as to how I should proceed? Can I gift only my son? His/their son also? How about my daughter-in-law, is she considered my relative? The baby may be considered a "non-marital" child. Does this category affect my annual giving?

Ms M.P., USA

The rules in the United States and in Ireland are quite different on the subject of gift tax . In the US, the responsibility for paying tax on any gift, if due, is on the disponer – the person making the gift. In Ireland, the beneficiary is legally responsible for any tax due.

In relation to amounts, in America, you can gift up to $14,000 in a year to your son without even having to consider tax; the same can be gifted to your daughter in law over there, though I’m not sure how marital status would affect things over there.

In Ireland, the situation is slightly different. First, the maximum amount someone can receive here in any given tax year with having to consider tax issues is €3,000. This is called the “small gift exemption”.

However, there is nothing to restrict who you give money to or requiring that there be any blood or family connection.

You can give €3,000 a year, every year, to each of your son, his partner and your grandson – in law, you could even give the same to their neighbours or anyone else. I’m not suggesting you do, only to illustrate that there is no restriction on who you can gift in this way. The only time Revenue gets shirty is if they think you are gifting someone only as an intermediary, where the intention is that they pass the gift on to another person – like your son – who has already benefited fully from the small gift exemption from you in that year.

Lifetime limit

Over that €3,000 threshold has been exceeded, as in the United States, the excess counts against a lifetime limit. But, whereas in the US, this threshold applies to the donor (and is a generous $5.43 million), in Ireland it relates to the beneficiary. And, over here, the threshold differs depending on the relationship between the donor and the beneficiary.

There are three thresholds. Category A relates to gifts (and inheritances) from a parent to a child and the current lifetime limit is €280,000. This has come down from €542,544 back in 2009, when austerity measures were introduced in the wake of the financial crisis to raise more money for the taxman.

There is talk of this threshold being restored to around €500,000 and there may be some move towards this in our upcoming national budget in October, so it is worth keeping an eye on that.

Category B, which covers gifts and inheritances to a “linear relative” – ie a sibling, niece or nephew, or grandchildren – has a threshold of €30,150, though, again, there is some pressure to restore this towards previous levels (above €54,000). This is less likely to occur in the forthcoming budget.

From your point of view, your grandson comes into this category, regardless of the martial relationship of his parents.

Finally,Category C has a threshold traditionally half that of Category B – currently €15,075) and this applies to all other relationships deemed to be between “strangers”. For your purposes, any financial gifts or inheritances over the small gift exemption to your daughter-in-law come under this heading and, for what it’s worth, it doesn’t matter whether she is married to your son or not. A married daughter-in-law is just as much a “stranger” under the gift tax code – formally the capital acquisitions tax – as a blood relative’s unmarried partner.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice