Dáil Éireann Debate, Wednesday - 13 July 2016
102. Deputy Bobby Aylward asked the Minister for Finance if he will consider raising the tax-free group B threshold from €30,150 for those inheriting cash or assets from someone outside of their direct family, given that the group A threshold was increased to €280,000 in budget 2016; and if he will make a statement on the matter. [21491/16]
View answer103. Deputy Bobby Aylward asked the Minister for Finance his views on the huge difference between the tax-free group A and group B thresholds for inheriting money or assets and the inequality it imposes on older citizens who have no children but who may wish to pass on money or assets to nieces or nephews who have cared for them in later life; and if he will make a statement on the matter. [21492/16]
View answer104. Deputy Bobby Aylward asked the Minister for Finance the plans and provisions he is examining and implanting for the tax-free group B threshold for those inheriting money or assets from persons outside of their direct family ahead of budget 2017; and if he will make a statement on the matter. [21493/16]
View answerI propose to take Questions Nos. 102 to 104, inclusive, together.
Capital 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. I raised this threshold from €225,000 to its current level as part of Budget 2016.
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.
I have indicated that I see the recent change to the Group A threshold as the beginning of a process. The Deputy will be aware of the commitment in the Programme for a Partnership Government to work with the Oireachtas to raise the Band A capital acquisitions tax threshold (including all gifts and inheritances from parents to their children) to €500,000. Depending on various factors, including the state of the public finances, I will examine the scope for further changes in the future, including the possibility of changes to the Group B and Group C thresholds.
