Vol. 498 No. 5
155 Mr. N. Ahern asked the Minister for Finance the threshold which applies for gifts and inheritance taxes between an adult and her niece; if there are any special considerations, or exemptions where the recipient is disabled and wheelchair bound; the other special provisions, if any, which exist allowing for a gift to be given or expenses to be paid over a period to a wheelchair bound person. [28121/98]
I am informed by the Revenue Commissioners that the threshold which applies for gift and inheritance tax between an adult and her niece is £25,120 where the benefit in question is taken on or after 2 December 1988 and the niece has not taken any other gift or inheritance since 2 December 1988.
While there are no special considerations or exemptions where the recipient is disabled and wheelchair bound, there are a number of provisions which may be relevant in this case. These include: where the inheritance in question consists of a house and the niece has resided in the house with the aunt for ten years and does not own any other house, she may be entitled to reduce the value of the house for inheritance tax purposes by 80 per cent or £150,000, whichever is the lesser; payments made for the support, maintenance or education of the niece may qualify for exemption from gift tax where the aunt stands in loco parentis to her niece or the aunt is entitled to claim dependent relative allowance for income tax purposes in respect of her niece and payments made exclusively for the purpose of discharging the medical expenses of the niece, including the cost of maintenance in connection with medical care, may also qualify for exemption where the niece is permanently incapacitated by reason of physical or mental infirmity.
A further relief is also available, in certain circumstances, where the gift or inheritance in question consists of property used in a business, or shares in a company carrying on a business, and the niece has worked in the business substantially on a full time basis for a period of five years. In the event of such a situation arising the niece may qualify for the "child threshold" of £188,400 where the benefit is taken in 1998.
Finally, the first £500 of the taxable value of all gifts taken by the niece from her aunt in any one year is exempt from gift tax. However, in this year's budget I increased this annual gift tax exemption limit to £1,000 for gifts taken in 1999 and subsequent years.
