Capital acquisitions tax is charged at a flat rate of 20% on the excess of the tax free threshold, known as the group threshold, applicable to a gift or inheritance taken by a person. In arriving at the group threshold for a gift or inheritance received by a person on or after 1 December 1999 from a brother or sister, all gifts and inheritances received by that person since 5 December 1991 from persons in the same group must be taken into account. This is an aggregation of gifts and inheritances from persons in the same group. A beneficiary's brothers, sisters, aunts, uncles, lineal ancestors and lineal descendants other than a child, or a minor child of a deceased child, such as grandparents and grandchildren, are all in the same group. This group has a tax-free threshold of €45,644 for gifts and inheritances taken in 2004 having been increased by an indexation factor each year since the year 2000.
Where a dwelling house is taken by way of a gift or inheritance from a brother or sister, a capital acquisitions tax exemption applies if that dwelling-house was occupied continuously by the beneficiary as his or her only or main residence for a period of three years prior to the date of the gift or inheritance. The beneficiary must not have an interest in any other residential property. It is also a condition of the exemption that the beneficiary must own and reside in the dwelling house for six years after the date of the gift or inheritance. This condition does not apply where the beneficiary is over 55 years or where the beneficiary is unable to comply with the residence requirements for reasons outside his or her control, for example, due to work obligations or hospitalisation.
A relief from capital acquisitions tax applies where a gift or inheritance of business assets is taken by a nephew or niece who worked substantially on a full-time basis in that business for his or her aunt or uncle for a period of five years prior to the date of the gift or inheritance. A nephew or niece who qualifies for this relief is entitled to the same tax-free threshold as if he or she were a son or daughter of the disponer. This threshold is €456,438 for gifts and inheritances taken in the year 2004.
I am advised by the Revenue Commissioners that the capital acquisitions tax code does not allow a credit for tax paid in respect of an event against the capital acquisitions tax liability arising on any subsequent event. In a situation where three siblings are living together, on the death of one of them, a capital acquisitions tax liability can arise in respect of the resulting inheritance. The tax paid is not allowed as a credit against any capital acquisitions tax liability arising on a subsequent death.
Capital acquisitions tax becomes due and payable on the valuation date in respect of the inheritances taken on the death of each of the three siblings. The valuation date in the case of an inheritance is the date when the executor or administrator of an estate is entitled to distribute the property to a beneficiary. If Deputy Cregan has a particular case or set of circumstances in mind, he may wish to contact the Revenue Commissioners for further clarification.
