Alan Dillon (Mayo, Fine Gael) | Oireachtas source

I thank the Senator for her question. I note the concerns and cases raised. I am taking this Commencement matter on behalf of the Minister for Finance, Deputy Donohoe. As the Senator stated, CAT is a beneficiary-orientated tax payable by the recipient of a gift or inheritance, as opposed to the person providing that gift or inheritance. For CAT purposes, 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, currently €400,000, applies where the beneficiary is a child of the disponer. For clarity, it is useful to note the definition for children for CAT purposes includes any stepchildren, adopted children or certain foster children. All can avail of the group A threshold in respect of gifts and inheritances received from that disponer. The group B threshold, currently €40,000, 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, currently €20,000, applies in all other cases. Where a person receives gifts or inheritances in excess of the relevant tax-free threshold, CAT at a rate of 33% applies on the excess benefit.

There are several exemptions and reliefs from this tax that may apply depending on the circumstances of the case, some of which do not require that any specific family relationship applies. One such exemption is the CAT dwelling house exemption. Where a person takes an inheritance of a dwelling house, that person may be able to avail of the dwelling house exemption. To qualify for the exemption, the inherited property must have been the disponer’s principal private residence at the date of death. The beneficiary must also have lived in the house for three years prior to the date of the inheritance and must continue to live in the house for six years after that date. In addition, the beneficiary must not have a beneficial interest in any other residential property. Detailed guidance on the dwelling house exemption is published on the Revenue website. In addition, nieces or nephews of that disponer may qualify for favourite niece or favourite nephew relief in respect of gifts or inheritances of business assets. The relief allows a niece or nephew who qualifies for the relief to avail of the group A threshold. Qualifying nieces or nephews are those who have worked substantially on a full-time basis for a period of five years prior to the gift or inheritance being given in carrying on, or assisting in the carrying on, the trade, business or profession of the disponer.

The Senator should note that the existing CAT regime, as with all legislation, was created with the benefit of advice from the Attorney General. In this regard, all legislation enjoys the presumption of constitutionality unless the courts determine otherwise. Superior courts review the constitutionality of legislation when specific cases are presented. Therefore, we do not believe the current CAT is unconstitutional.