I am informed by Revenue that, for capital acquisitions tax 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 capital acquisitions tax does not arise. The Group A threshold (currently €320,000) 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.
Therefore, the current position is that certain children in informal long-term foster care arrangements can avail of the Group A tax-free threshold as can children who are the subject of short-term formal fostering arrangements.