Joan Burton (Dublin West, Labour) | Oireachtas source

I move amendment No. 101:

In page 93, between lines 32 and 33, to insert the following:“Tax exemption for dwelling house

51. The Minister shall within one month of the passing of this Act prepare and lay before Dáil Éireann a report on the operation of section 86 of the Capital Acquisitions Tax Consolidation Act 2003 (which provides that gifts or inheritances of a dwelling house are in certain circumstances exempt from capital acquisitions tax), insofar as the section facilitates the purchase by parents of valuable homes for their children and the inter vivos transfer of those homes, as a means of avoiding inheritance tax.”.

My amendment refers to a development in respect of capital acquisitions tax. It requests that the Minister, within one month of the passing of the Finance Act, would lay before the Dáil a report on the operation of section 86 of the Capital Acquisitions Tax Consolidation Act 2003 where gifts or inheritance, in respect of dwelling houses are, in certain circumstances, exempt from capital acquisitions tax. The section is being used by high net wealth people to pass valuable homes to their children and there have been a number of examples. I believe the Department has received those examples of houses worth €1 million or so being purchased for children and then using the provisions of section 86 to ensure that over a period of time a very valuable property is passed to the child and that the transfer is tax free.

In terms of our CAT structures, the Minister increased the threshold for capital acquisitions tax for a transfer from a parent to a child from €280,000 to €310,000 in this year's Act. The abuse of section 86 can only really be practised by high net worth individuals because only somebody who is very well off could afford to buy a child or a number of children very expensive houses, in some cases for values of up to around €1 million. Provided they meet the requirements of section 86, which they can arrange, they can pass the asset, which would otherwise incur capital acquisitions tax at the appropriate rate, tax-free to the child. The purpose of the report would be to set out the context and cost of what has happened here. This is something which in recent times some wealth managers and tax and legal advisers have advised high net worth individuals to utilise to pass assets to their children without any issues arising in terms of paying capital acquisitions tax. This is an important public policy issue. I would like the Minister to agree to have this report prepared and laid before the House. The Revenue Commissioners are well aware of the situation and I believe such a report could be compiled quickly.

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