Reduce taxation by gifting.

[JBChiangRai]

There are some things you can do yourself fairly safely.

 

I "gift" my two adopted daughters at university 180km away enough funds for the whole year, direct from the UK at the beginning of each year.  To cover tuition fees, house expenses (I gifted them the money from the UK to buy the house), car running costs, food, clothing.  In effect, everything they need for the year.

 

Clearly, I get no benefit, so it can't be argued it's a gift with reservation.

 

They want to do "Work & Travel" between academic years next year.  I recently gifted them from the UK all the funds to do that, it's not cheap.

 

Clearly, I get no benefit, so it can't be argued it's a gift with reservation.

 

My strategy this year and next year is to bring in no funds to Thailand and see what happens to everyone else.  I am fairly certain the answer to that is "Nothing".

[BKKKevin]

Curious?…

If I were to have an expensive medical procedure of say 300k+ baht and decided to charge that on my home country credit card so I could get 3% cash back and pay in installments would that be evasion of accessible income tax?…

[BKKBike09]

On 9/4/2024 at 1:05 PM, jerrymahoney said:

If what is being suggested is true, it should be already routine in the 8 years since the gift tax revision

 

I suspect the reason what is being suggested [gifting from overseas to spouse/for educational purposes] has not been routine is because there was no need for this when it was completely okay to send yourself funds that were then treated as not subject to tax in Thailand as long as earned in a previous tax year (proof of which was never sought).

 

The RD abolishing this long-standing previous interpretation on what was tax-free personal remittance from overseas is surely what has led to the sudden interest in the gift option.

 

Maybe they'll tighten up on this. Maybe they won't. I think it's interesting RD back-tracked on the new remittance interpretation so that now it's only monies earned after 1 Jan 2024 that are taxable when remitted.

 

I think it's sensible to keep a record of your overseas bank balance(s) as of 31 Dec 2023 so that - if ever asked by RD - you can demonstrate clearly funds sent in after that date were already in that account. For example if you had USD 50,000 balance in a foreign account as of 31.12.24, and subsequently sent USD 15,000 a year to yourself in Thailand, that would be three years plus of time in which the likely direction of RD travel on all this should become much clearer.

 

 

 

[jerrymahoney]

1 hour ago, BKKBike09 said:

I suspect the reason what is being suggested [gifting from overseas to spouse/for educational purposes] has not been routine is because there was no need for this when it was completely okay to send yourself funds that were then treated as not subject to tax in Thailand as long as earned in a previous tax year (proof of which was never sought).

Yes I have noted that. The use of a gift would mean you wouldn't have to wait a year if you needed it now. You could bring it in current year.

 

It seems to me a good deal of this discussion on this and realted topics is how can I be both the expat giftor and the tax-free Thai resident giftee.

[chiang mai]

20 minutes ago, jerrymahoney said:

Yes I have noted that. The use of a gift would mean you wouldn't have to wait a year if you needed it now. You could bring it in current year.

 

It seems to me a good deal of this discussion on this and realted topics is how can I be both the expat giftor and the tax-free Thai resident giftee.

Which of course you cannot.

[vibration]

I pay tax to both Norway and Thailand and since October 2023 I have sent some monetary gifts to my wifes account from abroad very, very much under the 20 million THB limit per year.

 

Had I known about this prior to October 2023 then I would have done this before.

 

Before any GIFT TO WIFE amounts were sent we made a written signed and witnessed agreement about this basically confirming the Gifts could not be used in any way for benefit to me.

 

My wife has used the money to buy GSB Lottery Ticketss in her name, buy gold and given money to her family.

 

Good luck to all Members regarding Tax.

[Lorry]

8 hours ago, chiang mai said:

Blatant tax evasion which is illegal and not allowed to be discussed.

I guess you are right. 

But I always found HMRS' view that all money used for goods or services used inside the country of tax residence,  are taxable remittances, an extreme overextension of "logic".

 

All the money I spent to buy clothes in my home country that I wear here - taxable remittances? Are they going to tax my underwear prorata? 

 

But I will stay on the safe side and won't use the shenanigans  suggested. 

Way too blatant, in-your-face tax evasion. It may be they don't care.  But it may also be, their reaction is "do you really think we are that stupid?"

[chiang mai]

1 minute ago, Lorry said:

I guess you are right. 

But I always found HMRS' view that all money used for goods or services used inside the country of tax residence,  are taxable remittances, an extreme overextension of "logic".

 

All the money I spent to buy clothes in my home country that I wear here - taxable remittances? Are they going to tax my underwear prorata? 

 

But I will stay on the safe side and won't use the shenanigans  suggested. 

Way too blatant, in-your-face tax evasion. It may be they don't care.  But it may also be, their reaction is "do you really think we are that stupid?"

...especially the last part.

[Lorry]

4 hours ago, BKKKevin said:

Curious?…

If I were to have an expensive medical procedure of say 300k+ baht and decided to charge that on my home country credit card so I could get 3% cash back and pay in installments would that be evasion of accessible income tax?…

Summarizing what we know so far: you probably may have to pay tax on those 300k+, nobody really knows for sure. 

For the moment,  they cannot check it. But in 2027? (they can always  audit 3 years back)

For myself, I just assume that medical care just got 35% more expensive. 

 

BTW 300k+ is not expensive;  add a zero and it's expensive,  but common; add 2 zeroes and it's unheard of - expect to see it rather sooner than later.

 

[anrcaccount]

6 hours ago, BKKKevin said:

Curious?…

If I were to have an expensive medical procedure of say 300k+ baht and decided to charge that on my home country credit card so I could get 3% cash back and pay in installments would that be evasion of accessible income tax?…

 

Based on the opinion of multiple , established and credentialed Thai Tax advisors, to name two : American International Tax Advisors ( linked to video earlier in this thread)  and Mahanakorn Partners(linked to in an extensive interview in previous thread) , the answer is no, that is not evasion and is acceptable. 

 

As of now this is allowed. Currently, foreign credit card transactions will not be considered taxable. 

 

You can choose to believe these credible sources, or some of what you read on here. Up to you.

[chiang mai]

6 hours ago, BKKKevin said:

Curious?…

If I were to have an expensive medical procedure of say 300k+ baht and decided to charge that on my home country credit card so I could get 3% cash back and pay in installments would that be evasion of accessible income tax?…

Several people have offered opinions on this but the TRD themselves have remained silent, with the exception of a statement made at a presentation in Hua Hin many months ago which I won't repeat here because I can't be bothered looking for the link! That said, two countries, India and Japan, have both enacted legislation this year to address the issue of overseas use of credit cards. In both examples, foreign transactions are subject to a government levy as an acknowledgement that those transactions are assessable income of sorts. This is similar to the UK HMRC model whereby credit card transactions by non-doms are regarded as assessable income. The link to the articles is below.

 

 

 

[Lorry]

12 hours ago, BKKKevin said:

Curious?…

If I were to have an expensive medical procedure of say 300k+ baht and decided to charge that on my home country credit card so I could get 3% cash back and pay in installments would that be evasion of accessible income tax?…

anrc's response "it is allowed" is irresponsible,  dangerous and - in this generalized form - wrong.

 

From the TRD themselves we have only heard in one video that credit card transactions count as taxable remittances. It was either the Swiss Embassy video or the French Embassy video, I tried to find it for you but couldn't, sorry.

(Your question has been discussed on AN many times, as have those videos, and unfortunately AN isn't easily searchable. I don't keep a database of links to answered questions).

 

It was not one of the multitude of useless vlogger videos jumping on the bandwagon, and the people speaking were officials from the TRD.

Quite the opposite to what these officials said,  is what an Italian from  Mahanakorn partners says in a vlogger's youtube channel: only money remitted from abroad into your own Thai bank account will be taxed.  When the video was discussed here,  nobody took him serious, too much does it contradict all the TRD has ever publicly said.

 

There are however good, real reasons to argue credit card transactions shouldn't be taxed: credit is not income ( @JimGanthas explained it very well). We don't know what the TRD thinks. 

 

BTW you should read the pinned tax thread.

 

[chiang mai]

19 hours ago, BKKKevin said:

Curious?…

If I were to have an expensive medical procedure of say 300k+ baht and decided to charge that on my home country credit card so I could get 3% cash back and pay in installments would that be evasion of accessible income tax?…

Just to prolong the agony, let me add to this topic:

 

The two issues with credit card usage Kevin is a) the fact that you're using credit rather than capital or cash, and, b) whether or not the money you use in your home country to pay the credit card bill is income or savings.

 

Point a) above needs to be set aside because the debate is circular and no two people agree. A credit card transaction is credit but if it's a cash advance it's not. And since it's revolving credit it's unlike a specific credit agreement to buy something specific.

 

If you can get around point a), AND you use none assessable savings in your home country to pay your credit card bill, the argument in favour of a credit card transaction NOT being assessable to tax here, is pretty strong....I think. Ultimately however it will come down to point b) as the main issue, are you using a credit card to skirt around using a debit card which is seen as assessable income (subject to the funds not being savings).

[anrcaccount]

On gifts, what do you make of then of the  second part of the following statement below ( bolded)  from a lawyer at TRD? 

 

To me, he is saying if your wife gifts you up to 20M THB, from a foreign source, to your Thai account, it is exempt from being assessable income. Seems pretty clear, that's what he says.

 

@Lorry posted this on another thread, but it's relevant to this one.

 

As some of you don't appear to trust expert tax professionals like the AITA, is this a source you believe?

 

 

 

#AskTheEmbassy with Khun Nathanan Junprateepchai, Revenue Department 

 

41:05 starts about gifts. 

Kh. Nathanan: "so, example, if you have Thai wife,  and you are Swiss, you give Thai wife support, right, then Thai wife will be exempted from tax.

Or, in another case, if you stay in Thailand,  and your wife is outside, and pay[s] you money inside Thailand, i[t']s a foreign source,  right,  will be exempt up to 20 million Baht per year"

[motdaeng]

27 minutes ago, anrcaccount said:

As some of you don't appear to trust expert tax professionals like the AITA, is this a source you believe?

 

#AskTheEmbassy with Khun Nathanan Junprateepchai, Revenue Department 

 

i watched the video a few months ago, and neither of them convinced me ... the questions nor the answers. it was more of an embarrassing event, also with some false statements. i would not to suddenly start transferring money to my wife and declaring it as a "tax-free-gift" on the tax return ... but as always, up to you ...

[sometimewoodworker]

On 9/6/2024 at 12:01 PM, vibration said:

Before any GIFT TO WIFE amounts were sent we made a written signed and witnessed agreement about this basically confirming the Gifts could not be used in any way for benefit to me.

Legal opinion is that each gift requires an individual contract. 

 

For confirmation ask any Thai practicing lawyer.

[chiang mai]

3 hours ago, anrcaccount said:

On gifts, what do you make of then of the  second part of the following statement below ( bolded)  from a lawyer at TRD? 

 

To me, he is saying if your wife gifts you up to 20M THB, from a foreign source, to your Thai account, it is exempt from being assessable income. Seems pretty clear, that's what he says.

 

@Lorry posted this on another thread, but it's relevant to this one.

 

As some of you don't appear to trust expert tax professionals like the AITA, is this a source you believe?

 

 

 

#AskTheEmbassy with Khun Nathanan Junprateepchai, Revenue Department 

 

41:05 starts about gifts. 

Kh. Nathanan: "so, example, if you have Thai wife,  and you are Swiss, you give Thai wife support, right, then Thai wife will be exempted from tax.

Or, in another case, if you stay in Thailand,  and your wife is outside, and pay[s] you money inside Thailand, i[t']s a foreign source,  right,  will be exempt up to 20 million Baht per year"

More holes in that than is Swiss cheese.

[sometimewoodworker]

On 9/6/2024 at 1:11 PM, Lorry said:

But I always found HMRS' view that all money used for goods or services used inside the country of tax residence,  are taxable remittances, an extreme overextension of "logic".

What do you mean by “HMRS” 

it certainly isn’t the Thai Revenue Department 

nor is it the U.K. His Majesties Revenue and Customs 

[chiang mai]

4 minutes ago, sometimewoodworker said:

What do you mean by “HMRS” 

it certainly isn’t the Thai Revenue Department 

nor is it the U.K. His Majesties Revenue and Customs 

I hate grammar nazi's but this is an exception, Majesty's, singular.

[bkk6060]

On 9/6/2024 at 1:15 AM, anrcaccount said:

Based on the opinion of multiple , established and credentialed Thai Tax advisors, to name two : American International Tax Advisors ( linked to video earlier in this thread)  and Mahanakorn Partners(linked to in an extensive interview in previous thread) , the answer is no, that is not evasion and is acceptable.

Was not impressed at all with the American guy.  When asked about I believe it was ATM and or CC, he said; no tax, just don´t use them too much.  ??  What does that mean?  Is there some limit in usage or is he a big know nothing like most of these people.

[proton]

If it's this confusing the Thai tax offices wont have a hope of understanding what they are doing or what the rules are

[JBChiangRai]

I can see why a contract and proof that the gift was without reservation is required for gifts between partners/spouses, however, I doubt a contract is required between parents and children, children are not allowed to sign contracts before the age of 20, and if they don’t need to do it before the age of 20, then they don’t need to do it afterwards. All that is needed is proof that the gift was without reservation.

[Lorry]

2 hours ago, sometimewoodworker said:

What do you mean by “HMRS” 

it certainly isn’t the Thai Revenue Department 

nor is it the U.K. His Majesties Revenue and Customs 

HMRC

I don't deal with them and couldn't remember the correct name, i remembered a C, but thought why should there be a C?

Now I know. 

[Lorry]

5 hours ago, anrcaccount said:

To me, he is saying if your wife gifts you up to 20M THB, from a foreign source, to your Thai account, it is exempt from being assessable income. Seems pretty clear, that's what he says.

I see it the same way. But I noticed he said "if... your wife is outside [Thailand]"

I didn't want to open this discussion again. We only have these words, everybody can think whatever he wants about them. 

Sorry for posting it in the wrong thread. 

[Lorry]

2 hours ago, sometimewoodworker said:

Legal opinion is that each gift requires an individual contract. 

 

For confirmation ask any Thai practicing lawyer.

Thx for stressing this. 

[Lorry]

2 hours ago, chiang mai said:

More holes in that than is Swiss cheese.

Please elaborate?

[sometimewoodworker]

3 hours ago, JBChiangRai said:

I can see why a contract and proof that the gift was without reservation is required for gifts between partners/spouses, however, I doubt a contract is required between parents and children, children are not allowed to sign contracts before the age of 20, and if they don’t need to do it before the age of 20, then they don’t need to do it afterwards. All that is needed is proof that the gift was without reservation.

You misunderstand the situation all gifts in Thailand require proof that it is a gift to limit taxation on them. Hence the need for a gift contract which establishes that a a gift has been given. Other countries have other requirements, the TRD requires that proof it be incontrovertible hence the need for a contract.
 

 

You also misunderstand the law on minors signing a contract. Yes it is true that a minor cannot sign sui juris and that if they do the contract is void, however they can sign with  a legal representative’s consent. I don’t pretend to know the limitations of who can be the legal representative but I’m sure any competent Thai lawyer can advise, though it’s unlikely that a parent giving a gift to a minor could qualify as the required legal representative.

 

You are also missing the point that gift law in Thailand is comprehensive and a money gift is only one kind that is covered.

[terryq]

4 hours ago, sometimewoodworker said:

Legal opinion is that each gift requires an individual contract. 

 

For confirmation ask any Thai practicing lawyer.

 If the gift is between spouses a contract between them whilst legal is unenforceable  (CCC1469)

 

 

[chiang mai]

2 hours ago, Lorry said:

Please elaborate?

This video was poo poo'ed up one side and down the other when it was first released, do you not recall from the long thread? Perhaps go back and take a look at what was said.

[JBChiangRai]

27 minutes ago, sometimewoodworker said:

You misunderstand the situation all gifts in Thailand require proof that it is a gift to limit taxation on them. Hence the need for a gift contract which establishes that a a gift has been given. Other countries have other requirements, the TRD requires that proof it be incontrovertible hence the need for a contract.
 

 

You also misunderstand the law on minors signing a contract. Yes it is true that a minor cannot sign sui juris and that if they do the contract is void, however they can sign with  a legal representative’s consent. I don’t pretend to know the limitations of who can be the legal representative but I’m sure any competent Thai lawyer can advise, though it’s unlikely that a parent giving a gift to a minor could qualify as the required legal representative.

 

You are also missing the point that gift law in Thailand is comprehensive and a money gift is only one kind that is covered.

Thank you but I can say I’m not missing anything.  I do what’s recommended by my Thai Tax Accountant & qualified Auditor.