Dáil Éireann Debate, Wednesday - 27 September 2023
62. Deputy Steven Matthews asked the Minister for Finance further to Parliamentary Question No. 160 of 20 September 2023, if he can provide a timeline for the completion of the Departmental review of inheritance tax implications for foster children; and if he will make a statement on the matter. [41717/23]
View answerAs the Deputy may be aware, for Capital Acquisitions Tax (CAT) purposes, the relationship between the deceased person (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary) determines the maximum amount, known as the “Group threshold”, below which CAT does not arise. The Group A threshold (currently €335,000) applies, inter alia, where the beneficiary is a child (including adopted child, stepchild and certain foster children) of the disponer.
A foster child is treated as a child of the disponer and can avail of the Group A threshold in the following circumstances:
- in respect of a gift or an inheritance from a foster parent with whom he or she has lived, and who has cared for and maintained the child at his or her own expense, for a cumulative period of at least 5 years before the child’s 18th birthday, or
- in respect of an inheritance from a foster parent where, prior to the inheritance, the child had been placed in the care of the foster parent under the Child Care (Placement of Children in Foster Care) Regulations 1995, or the Child Care (Placement of Children with Relatives) Regulations 1995.
The current position is that certain children in either informal long-term foster care arrangements or formal foster care arrangements can avail of the Group A tax-free threshold on inheritances from a foster parent. Where a foster child who is the subject of an informal long-term arrangement avails of the Group A threshold, there is a requirement that a minimum of two witnesses can attest to the bona fides of the arrangement.
In relation to the specific question regarding a Departmental review of inheritance tax implications for foster children, while there is no formal review in place in the manner as suggested by the Deputy, this matter along with all Capital Acquisitions tax matters is under review as part of the annual Budget and Finance Bill process.
