Dáil Éireann Debate, Thursday - 17 November 2022
153. Deputy Richard Boyd Barrett asked the Minister for Finance the tax liability there would be for an Irish Citizen receiving a gift from a Canadian citizen, who is their sister, resident in Bahrain; and if he will make a statement on the matter. [57066/22]
Amharc ar fhreagraI am advised by Revenue that it is not possible to provide a definitive response to the Deputy’s question, in the absence of specific details. However, an overview of the possible CAT treatment of the gift he has referred to is set out hereunder.
The Capital Acquisitions Tax Consolidation Act 2003 (CATCA 2003) provides for a charge to capital acquisitions tax to be imposed on individuals who receive gifts and inheritances for less than full consideration where:
- the property gifted or inherited is situated in Ireland, or
- the property gifted or inherited is situated outside of Ireland and:
- the disponer or transferor is resident or ordinarily resident in the State at the date of the disposition, or
- the beneficiary or recipient is resident or ordinarily resident in the State at the date of the gift or inheritance.
While the information provided suggests that the disponer is not Irish resident, it is unclear whether the beneficiary, referred to as an Irish citizen, is resident or ordinarily resident in Ireland. It is also unclear whether the gift is comprised of Irish situated property. It is therefore not possible to confirm whether the gift referred to by the Deputy is within the charge to CAT.
Where a gift (or inheritance) is within the charge to Irish CAT, the tax liability will be computed in accordance with the relevant provisions of CATCA 2003.
For CAT purposes, the relationship between the disponer and the beneficiary determines the maximum amount, known as the “Group threshold”, below which CAT does not arise. Any prior gift or inheritance received by a beneficiary since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether any tax 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 benefit. There are three Group thresholds:
- the Group A threshold (currently €335,000) applies, inter alia, where the beneficiary is a child (including adopted child, stepchild and 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.
The Group thresholds do not apply to gifts and inheritances between spouses / civil partners, which are exempt from CAT.
In addition, a person may receive gifts up to a total value of €3,000 from any other person in any calendar year without having to pay CAT (the “small gifts exemption”). Gifts within this limit are not taken into account in computing tax and are not included for aggregation purposes. The relationship between disponer and beneficiary is not relevant for the purpose of the small gifts exemption. Where a person receives gifts from a number of different disponers in any calendar year, he/she will be entitled to a small gift exemption of €3,000 in respect of each disponer.
Where a liability to CAT arises on a gift or inheritance and a similar foreign tax is payable on the same property, relief from double taxation may be available. Ireland has two double taxation treaties for CAT purposes, one with the United Kingdom (UK) and one with the United States of America (USA). The convention between Ireland and the US covers inheritance tax in Ireland and federal estate taxes in the US. It does not apply to gift tax. For countries where there is no double taxation treaty in force, unilateral relief may be available in respect of gifts and inheritances of foreign property. Information on the circumstances in which such relief may be available, and how the relief is computed, is available on the Revenue website at www.revenue.ie/en/gains-gifts-and-inheritance/credits-you-can-claim-against-cat/index.aspx.
As it is not possible to provide a definitive view in this case, the individuals concerned may wish to seek guidance directly from Revenue. Contact details for the National Capital Acquisitions Tax Unit are available on the Revenue website at www.revenue.ie/en/contact-us/customer-service-contact/national-capital-acquisitions-tax-cat-unit.aspx.
