Maureen O'Sullivan (Dublin Central, Independent) | Oireachtas source

We have a complicated system in respect of capital acquisitions tax. This tax has been a feature of the tax system since 1976. The 2003 Act sets out how the tax is to be charged and calculated. The Act provides for two types of tax, namely, gift tax and inheritance tax. I wish to raise a number of anomalies in the treatment of certain people when it comes to this tax. There is very favourable treatment for some individuals while others are treated unfavourably. It is tax justice for some and injustice and unfairness for others. One group that is treated unfavourably comprises those who cohabit. They are treated differently from those who are married or in civil partnerships. Spouses and civil partners who inherit from the other person in the relationship do not pay capital acquisitions tax, which is very different from the position of those who cohabit. That is one anomaly.

There is another anomaly for cohabitants. When a cohabitant dies and provides for the surviving cohabitant, the latter will pay tax. If one cohabitant dies without leaving anything to the surviving cohabitant, the latter can apply to court for a share in the estate. If that is granted, he or she will pay no tax. There is unfavourable treatment for a cohabiting couple if they are two sisters or brothers or other family relations or two friends or where one is a long-time carer. A shared home cannot be gifted to the surviving person in those relationships without a considerable tax burden being imposed.

The term "disponer" is used in the 2003 Act to refer to a person who is providing a benefit to others. It is the relationship between the disponer and the person benefiting that will make a very appreciable difference to the tax being paid on inheritance or gifts. The child of a disponer will have a tax free allowance almost ten times greater than another family member. A disponer who has children enjoys far more advantageous tax terms than a disponer who does not. While efforts must be made to ensure that wealthy people do not avoid or evade tax, certain relationships are penalised when it comes to capital acquisitions tax. There are significant tax exemptions and concessions for relationships which are formalised through marriage and civil partnership but not for cohabitants, regardless of whether the relationship is intimate, and most definitely not for single people who do not have children. The person receiving there pays very high tax.

The Minister's reply when I raise this issue is usually to say that the State pledges to protect the institution of marriage, including civil partnership. Really, however, this is very lucrative for the State but unfair to those who are not being treated like others. This matter must be examined and addressed.

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