Dáil Éireann Debate, Thursday - 7 July 2016
91. Deputy Clare Daly asked the Minister for Finance his plans to bring the group thresholds for capital acquisitions tax closer into line with each other, such that childless persons are not discriminated against relative to peers with children in regard to bequeathing their estates. [20405/16]
View answerCapital Acquisitions Tax (CAT) is the overall title for gift and inheritance tax.
For the purposes of CAT, the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary), determines the maximum life-time tax-free threshold known as the "Group threshold" below which gift or inheritance tax does not arise.
There are, in all, three separate Group thresholds based on the relationship of the beneficiary to the disponer.
- Group A: tax free threshold €280,000 applies where the beneficiary is a child (including adopted child, stepchild and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.
- Group B: tax free threshold €30,150 applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.
- Group C: tax free threshold €15,075 applies in all other cases.
Transfers and inheritance between spouses are not subject to CAT.
Where a person receives gifts or inheritances in excess of their relevant tax free threshold, CAT at a rate of 33% applies on the excess over the tax free threshold.
As with all tax areas, capital acquisitions tax (CAT), including issues such as rates of tax, tax-free thresholds, reliefs and exemptions, is kept under review. As part of Budget 2016 I raised the Group A tax-free threshold applying to gifts and inheritance from parents to their children from €225,000 to €280,000. This represented an increase of about 25%. I did this in recognition of the improving state of the public finances and of the concerns expressed to me by people making and receiving gifts and inheritances, particularly in a context of rising property prices.
I indicated at the time that I saw the change to the Group A tax-free threshold in the last Budget as the start of a process. The extent to which increases in the various tax-free thresholds for CAT purposes, can be accommodated in the future will depend, among other things, on the continuing economic recovery and the competing choices for limited resources. The Deputy will be aware of the commitment in the Programme for a Partnership Government to work with the Oireachtas to raise the Group A CAT tax-free threshold (including all gifts and inheritances from parents to their children) to €500,000.
