Dáil Éireann Debate, Thursday - 28 January 2016
66. Deputy Eoghan Murphy asked the Minister for Finance if he will amend the inheritance laws, to allow a flat allowance for an individual over a person’s lifetime, regardless of the size of the inheritance or the relationship with the donor; and if this would be fairer. [3515/16]
Amharc ar fhreagraCapital 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.
I take it that the Deputy proposes abolishing these different thresholds and applying a single lifetime tax-free threshold to all receipts by gift or inheritance in a person's lifetime regardless of who they are received from. I have no plans to make such a change to the CAT legislation. The differing treatment of gifts and inheritances depending on the recipient's relationship to the donor has been an element of CAT since its introduction. It reflects a recognition of the legitimate wish of people to be able to provide for those closest to them while at the same time protecting the tax base for capital tax purposes.
