Dáil Éireann Debate, Tuesday - 20 October 2020
212. Deputy Danny Healy-Rae asked the Minister for Finance if he plans to increase the category A tax free threshold parent and child from €335,000 to €500,000; and if he will make a statement on the matter. [31089/20]
Amharc ar fhreagraCapital Acquisitions Tax (CAT) is the overall title for both gift and inheritance tax. The tax is charged on the amount gifted to, or inherited by, the beneficiary of the gift or inheritance. CAT at a rate of 33% applies on the excess over the tax-free threshold.
There are three separate Group thresholds based on the relationship of the beneficiary to the disponer.
Group A threshold (currently €335,000) applies where the beneficiary is a child of the disponer. This includes adopted children, step children and some foster children.
Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, niece, nephew, or lineal ancestor or lineal descendant of the disponer.
Group C threshold (currently €16,250) applies in all other cases.
As the Deputy will be aware, consideration of possible changes to CAT rates and thresholds generally takes place as part of the annual Tax Strategy Group, Budget and Finance Bill process. Together, these processes consider options for changes across the wider tax system. In Budget 2021, I made no changes to the CAT Group thresholds.
However, in Budget 2020, I increased the Group A threshold from €320,000 to €335,000, and in Budget 2019 this was increased from €310,000 to €320,000.
The Group B threshold was last changed in Budget 2017, when it was increased by €2,350 to its current value of €32,500 and the Category C threshold was also increased by €1,175 to €16,250 at that time.
The Deputy will appreciate that there would be a significant cost in making substantial changes to CAT thresholds. The estimated full year cost of increasing the CAT A threshold from its current €335,000 to €500,000 is €68 million.
The options available for providing increases to CAT thresholds is normally considered in the context of available resources. This of course must be balanced against competing demands and must take into account the need to maintain the yield from CAT.
