Dáil Éireann Debate, Tuesday - 20 February 2024
217. Deputy Robert Troy asked the Minister for Finance if he will urgently review the thresholds for capital gains tax; if he agrees that it is unfair to have a different threshold for non-relatives, particularly in the case where it affects the child of a partner or ex-partner; and given the recent High Court case involving a widow's pension payment, if he agrees that this issue needs to be re-examined. [7707/24]
View answer218. Deputy Robert Troy asked the Minister for Finance if he will review the issue of capital gains tax in a case (details supplied). [7710/24]
View answerI propose to take Questions Nos. 217 and 218 together.
In respect of both of these questions, I assume the Deputy is referring to Capital Acquisitions Tax (CAT), which is a tax on gifts and inheritances payable by the beneficiary of that gift or inheritance.
In relation to the CAT thresholds, I am advised by Revenue that it is the relationship between the person providing a 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 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.
Notwithstanding the application of the Group thresholds, the Capital Acquisitions Tax Consolidation Act 2003 (CATCA 2003) 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.
In relation to the issue of CAT in the case referred to by the Deputy, I am further advised by Revenue that CATCA 2003 makes provision for the Group A threshold to be extended in certain circumstances.
This may include the specific circumstances referred to by the Deputy, which is where the beneficiary of property, while not related to the disponer, was in his care for many years. Given that the disponer and beneficiary are not related, the Group C threshold would ordinarily apply in such circumstances.
However, CATCA 2003 makes provision for the beneficiary of a gift or an inheritance, on making a claim to Revenue, to avail of the Group A threshold in relation to that gift or inheritance in circumstances where the beneficiary, while under the age of 18:
• resided with the disponer for at least 5 years in total, and
• was maintained and cared for by the disponer at the disponer’s expense.
Where these conditions are met, the Group A threshold will apply for the purposes of determining the CAT due, if any, on the gift or inheritance. This relief is generally referred to as “foster child relief”, however, it is not necessary for a formal fostering arrangement to be in place for the relief to apply.
Further information on foster child relief is available on the Revenue website at www.revenue.ie/en/gains-gifts-and-inheritance/cat-reliefs/foster-child-relief/taken-from-foster-parent.aspx.
In relation to the details provided of the specific case, it is not possible to provide a definitive answer. However, as per above, the person who is gifted the property could be entitled to the Group A Threshold in certain circumstances. If the person the Deputy refers to has further queries, they can contact Revenue using the MyEnquiries facility in myAccount or contact the National Capital Acquisitions Tax (CAT) Unit at 01 738 3673.
