Dáil Éireann debate -
Thursday, 19 Oct 1995

Vol. 457 No. 3

Written Answers. - Capital Acquisitions Tax.

Ivor Callely

Question:

68 Mr. Callely asked the Minister for Finance if, in the event of the referendum to permit divorce being successful, capital acquisitions tax will be applicable where a divorcee receives an inheritance from his/her former spouse; and if he will make a statement on the matter. [15254/95]

Minister for Finance (Mr. Quinn)

When a foreign divorce is recognised here, then property passing between the couple by way of inheritance on foot of an approved settlement by an Irish Court is untaxed as a result of the provisions of the Family Law Act, 1995. The Government envisages that this situation would also apply to civil divorces in this State were the referendum on divorce to be passed.

I refer the Deputy to page 26 of the Government Information Paper on the Divorce Referendum, published this September and titled The Right to Remarry, which outlines the position that will apply from a general capital taxation viewpoint if the divorce referendum is passed, as follows:

On the capital taxes side it is proposed that the provisions which are being applied to foreign divorces recognised here by the Family Law Bill (now Act) will be extended to cover couples divorced in this State. This means that property transfers between former spouses on foot of a court order governing a divorce settlement will be exempted from all capital taxes but, in relation to any subsequent property transfers not consequent on the divorce, they will be treated as strangers for Capital Gains Tax, Capital Acquisitions Tax, Probate Tax and Stamp Duty purposes. To put it more clearly, any property transfers related to the divorce will be exempted from all capital taxes, no matter at what point in time they occur. Property transfers which are not related will result in the couple involved being treated as strangers for the purposes of these taxes.