Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

The Deputy should note at the outset that capital acquisitions tax, CAT, is a beneficiary-orientated tax that is payable by the recipient of a gift or inheritance as opposed to the person providing that gift or inheritance. The relationship between the person giving a gift or inheritance, the disponer, and the person who receives it, the beneficiary, determines the maximum amount, known as the "group threshold", below which CAT does not arise.

The group A threshold is currently €400,000 and applies where the beneficiary is a child, including adopted child, stepchild and certain foster children of the disponer. The group B threshold is currently €40,000 and applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant, such as a grandchild, of the disponer. The group C threshold is currently €20,000 and applies in all other cases. Gifts and inheritances between spouses and civil partners are exempt from CAT.

Where a person receives gifts or inheritances that are in excess of the relevant tax-free threshold, capital acquisition tax at a rate of 33% applies on the excess benefit. There are a number of exemptions and reliefs from this tax that may apply depending on the circumstances of the case, many of which do not require that any specific family relationship applies.

The Deputy will be aware that there would be a significant cost in making substantial changes to the CAT thresholds and those who can access them. Therefore, any consideration of this type must be balanced against competing demands and as part of the annual budget and finance Bill cycle.

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