Dáil Éireann Debate, Tuesday - 26 March 2013
183. Deputy Derek Nolan asked the Minister for Finance his views on whether the total exemption from CAT on inter-spousal gifts under s70/71 CATCA 2003 remains appropriate, in view of the high profile instances in which it has been abused by certain individual borrowers to frustrate the claims of creditors; and if he will make a statement on the matter. [14778/13]
View answerThe position is that a number of exemptions and relief’s from CAT are provided for in CAT legislation. In accordance with the law in most common law jurisdictions, a complete exemption from CAT is available in relation to gifts and inheritances transferring between spouses. Section 70 CATCA 2003 provides that a gift taken by a donee who is at the date of the gift the spouse or civil partner of the disponer is exempt from tax and is not taken into account in computing tax. Section 71 CATCA 2003 similarly provides that an inheritance taken by a donee who is at the date of the inheritance the spouse or civil partner of the disponer is exempt from tax and is not taken into account in computing tax. Under CATA 1976 as originally enacted, no exemption was provided for spouses or surviving spouses. In many cases, a surviving spouse inheriting a relatively small estate comprising of the family home, a widow’s pension and other rights derived from a deceased husband was subject to CAT. Accordingly, with effect from 30 January 1985, all inheritances taken by a spouse from another spouse are exempt from tax. Gifts between spouses are exempt from tax since 31 January 1990.
These inheritance and gift tax exemptions were extended to civil partners as respects a gift or inheritance between civil partners taken on or after 1 January 2011.
The result is that CAT is not now charged on any transfers between spouses or civil partners either by way of gift or inheritance. CAT is effectively postponed until assets are passed on to the next generation.
The principle issue raised in the Deputy’s question is a possible avoidance of debt as opposed to an avoidance of tax. I do not believe that amendments to the sections referred to by the Deputy would deal with the issue raised.
More generally in the context of insolvency, both the Bankruptcy Act and the new Personal Insolvency Act contain provisions and offences regarding actions by a debtor who seeks to fraudulently or illegally deprive or defeat the legitimate rights of creditors.
