Capital Acquisitions Tax (CAT) is a tax on gifts and inheritances that is payable by the beneficiary of a gift or inheritance on the value of the property received. It is the relationship between the person providing the gift or inheritance (the disponer) and the person receiving the benefit (the beneficiary) that determines the tax-free threshold (Group threshold) below which CAT does not arise. Any prior gift or inheritance received by a person since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether any CAT is payable on a benefit. Where a person receives gifts or inheritances that are in excess of the relevant Group threshold, CAT at a rate of 33% applies on the excess. There are three Group thresholds:
- the Group A threshold (currently €335,000) applies, inter alia, where the beneficiary is a child (including certain foster children) of the disponer;
- the Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant of the disponer;
- the Group C threshold (currently €16,250) applies in all other cases.
As noted above, the Group A threshold is available to a beneficiary who is a child of the person providing the gift or inheritance. Where a person receives a gift or inheritance from a person other than a parent, the Group B or the Group C threshold will apply depending on the particular relationship that exists between the parties. The Group A threshold will also apply in the case of parents who inherit from their children where the interest taken is not a limited interest.
With regard to the reference to a single individual without children being disadvantaged by these CAT threshold rules, it is important to bear in mind that CAT is not payable by the individual providing the benefit. It is a donee-based tax that is payable by the recipient of a benefit, based on the taxable value of the benefit they receive. Where property is provided by way of gift or inheritance to a number of individuals, they will each have a Group Threshold in relation to that gift or inheritance based on their individual relationship with the disponer. Any prior benefits within the relevant group threshold will be aggregated in the manner outlined above.
In addition, CAT legislation provides for a number of reliefs and exemptions from CAT. Most of these are not contingent on a particular family relationship existing between the disponer and beneficiary. For example, reliefs are available in relation to gifts and inheritances of agricultural property and certain business property where certain conditions are met.
Further information on CAT, including the various CAT reliefs and exemptions, is available on the Revenue website at https://www.revenue.ie/en/gains-gifts-and-inheritance/index.aspx.
