Róisín Shortall (Dublin North West, Labour)
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Question 226: To ask the Minister for Finance the rationale for making the proceeds of the health repayment scheme for nursing home charges taxable in respect of the beneficiaries of the deceased patient's will. [36108/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that a repayment of nursing home charges in the case of a deceased patient would form part of the estate of that deceased person, and would be paid out to beneficiaries under the terms of the deceased patient's will or, in accordance with the Succession Act 1965 where the patient died intestate.

The capital acquisitions tax code charges to tax any benefit taken by a beneficiary upon the death of another person. In the case of a repayment of nursing home charges, the benefit of the repayment (or part thereof) is taken by the beneficiary, since the patient who incurred the charges in the first place is deceased and consequently, inheritance tax is potentially due from the beneficiaries concerned. It should be noted that the capital acquisitions tax code also provides for very generous thresholds which may result in a beneficiary not paying any inheritance tax on a benefit. The threshold amounts for 2006 (after indexation) are:

Relationship to Deceased Patient

Son/Daughter €478,155

Parent/Brother/Sister/Niece/

Nephew/Grandchild €47,815

Relationship other than those above €23,908

In addition, an inheritance taken by the surviving spouse of the deceased patient is completely exempt. I am further advised that the treatment for tax purposes of the repayment is exactly the same as it would be if the Estate of the deceased had been enlarged, by for example, a previously unknown bank account, where the proceeds pass on to the relevant beneficiaries.