Noel Ahern
Question:90 Mr. N. Ahern asked the Minister for Finance if he will give details of the inheritance tax, including thresholds, bands, and rates to a person's niece or nephew. [5395/97]
Written Answers - Capital Acquisitions Tax.
Capital acquisitions tax (CAT) is due whenever a person receives a gift or an inheritance, subject to certain exemptions and reliefs. The amount of tax, if any, which would be payable upon inheritance depends on a number of factors including the relationship between the disponer and the beneficiary, whether the beneficiary had received gifts or inheritances since 2 June 1982 and whether any specific relief would apply.
The threshold amount before CAT is liable for a niece or nephew is £24,740 for the calendar year 1997. There is an additional relief for gifts and inheritances of farm-business assets taken by a nephew or niece who has been working full-time on the farm or business for the period of five years prior to the date of transfer. In this situation the favourite nephew or niece can avail of the Class I threshold of £185,550 for the calendar year 1997.
The rate of CAT on inheritances is nil up to the threshold amount, 20 per cent on the next £10,000, 30 per cent on the next £30,000, and 40 per cent on the balance. CAT on gifts is at three-quarters of the rate of CAT on inheritances.
Where the beneficiary has received previous gifts and inheritances since 2 June 1982, the value of these benefits is added to the value of the current benefit when determining the CAT liability. This is known as aggregation. In such cases, the CAT-free threshold applicable to each gift or inheritance is calculated, and the highest one is used. Any CAT that is referable to the previous gifts or inheritances is taken into account, to arrive at the CAT that is due on the current benefit.
Finally, by virtue of Business Relief and Agricultural Relief, the value of qualifying assets may be reduced for CAT purposes by 90 per cent.