I am not aware that the Capital Acquisitions Tax system is unduly burdensome. The rates have been halved in many cases in recent years and the scope of the tax considerably narrowed.
For the purpose of Inheritance Tax, the relationship between the person who provided the inheritance (the disponer) and the person who received the inheritance (the beneficiary), determines the maximum tax-free threshold — known as the "Group threshold". Apart from the total exemption of transfers between spouses, there are three Group thresholds based on the relationship of the beneficiary to the disponer and these Group thresholds are indexed annually by reference to the Consumer Price Index as published by the Central Statistics Office.
The indexed Group thresholds for 2006 are as follows:
Group A: €478,155. This applies to inheritances received by a child, a step-child and a foster child from a parent. Group A also applies in certain circumstances to inheritances received by a parent from a child and by a grandchild from a grandparent.
Group B: €47,815. This applies to inheritances received by brothers, sisters, nephews, nieces, grandchildren and parents.
Group C: €23,908. This applies to inheritances received by a beneficiary who does not come under Group A or B.
Any prior inheritances received by a beneficiary since 5 December 1991 from within the same Group threshold are taken into account when calculating whether inheritance tax is payable on the current inheritance.
A niece or nephew who receives an inheritance is entitled to the Group A threshold of €478,155 provided certain conditions are fulfilled. These conditions are that the niece or nephew has worked substantially on a full-time basis for the disponer in the 5 years ending on the date of the inheritance in carrying on the business of the disponer and the inheritance consists of property, which was used in connection with the business.
There is also an exemption from inheritance tax for certain dwelling houses. The purpose of this exemption is to benefit individuals who had been living in a house for a period prior to taking the benefit. The main conditions attaching to the exemption are that the beneficiary of the dwelling house must have resided in the house for a minimum of 3 years prior to the inheritance and must not have had an interest in any other dwelling house. In addition, the beneficiary must continue to occupy that dwelling house as his or her only or main residence for a period of 6 years commencing on the date of the inheritance. This exemption ensures that what may be the family home for many people will not be the subject of inheritance tax when it is transferred.
These generous exemptions exist to address hardship that might otherwise arise.