Capital Acquisitions Tax or CAT, is the tax charged on gifts and inheritances. The current rate is 33%.
There are many exemptions and reliefs available such as:
CAT Exemption Thresholds
You do not pay tax on a gift or inheritance if its taxable value is below a particular threshold. The threshold you use depends on your relationship to the disponer. You must pay tax on any remaining value above that threshold.
There are three groups with different thresholds that apply from 7 December 2011.
Group A – €335,000
This applies where the relationship to the disponer is a son or daughter, stepchild, a minor child of a deceased child (grandchild or step-grandchild), or a parent of the disponer as long as they take an absolute interest (that is, not a limited interest) of an inheritance on the death of a child.
Group B – €32,500
This applies where you, the beneficiary, on the date of the gift or inheritance are: • a parent of the disponer • a brother or sister of the disponer • a child of a brother or sister of the disponer • a child of the civil partner of a brother or sister of the disponer • a grandparent of the disponer • a grandchild of the disponer • a lineal ancestor or a lineal descendant of the disponer.
Group C – €16,250
The Group C threshold applies where you, the beneficiary, on the date of the gift or inheritance has a relationship to the disponer not already covered in Groups A or B.
A grand-niece or grand-nephew falls into the Group C threshold for Capital Acquisitions Tax. There is often confusion over this, a grand-niece or grand-nephew is not a lineal descendant, they are collateral descendants.
Small Gift Exemption
You can receive a gift up to the value of €3,000 from any person within any calendar year tax free. This only applies to gifts and not inheritances.
Property received or inherited from a spouse is exempt from CAT. This exemption also applies to couples who are separated or divorced and the property passes by Court Order.
You may inherit a dwelling-house from a disponer tax free provided certain conditions are met.
If you receive a gift or inheritance of agricultural property, you may qualify for Agricultural Relief. This reduces the taxable value of the property, including land, by 90%. However the relief is subject to certain conditions.
If you do not meet the conditions to qualify for agricultural relief, you may qualify for Business Relief.
If you receive a gift or inheritance of business property, you may qualify for Business Relief. Business relief is granted on the transfer of relevant business property. It applies to the transfer of a business, a share in a business or the shares or securities of a company carrying on a business.
This reduces the taxable value of the business property by 90%. However the relief is subject to certain condition being met.
Business Relief doesn’t apply to individual assets, even if those assets were used in the business.
Favourite Niece/Nephew Relief
You may qualify for Favourite Niece/Nephew relief if you receive a gift or inheritance of business assets. The relief entitles you to avail of the Group A threshold, subject to certain conditions being met.
The above information may be helpful to you, but it is only intended to provide you with general outline of Capital Acquisitions Tax. Also please bear in mind that the list of exemptions and reliefs is not exhaustive it should not be used to determine ones tax liability. There are a wide variety of factors not mentioned, that need to be taken into account when ascertaining ones tax obligations. Therefore we always recommend seeking personalised tax advice regarding gifts and inheritances.
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