Brian Cowen (Laois-Offaly, Fianna Fail)
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The position is that elderly taxpayers are treated more favourably than the generality of taxpayers under the income tax code and this treatment was underlined in my 2007 Budget. After Budget 2007, elderly earners aged 65 or over may earn €19,000, if single, or €38,000, if married, without having any liability for income tax. Above these limits a system of marginal relief applies. The limits compare very favourably with the entry points to taxation for earners aged under 65 of €17,600 for a single person, €26,400 for a married one-earner couple without dependent children and €35,200 for a married two earner couple.

Where elderly earners cannot benefit from the age exemption limits because their income is above a level where the limits would be of benefit, such earners are entitled to the age tax credit which, after Budget 2007, stands at €275 for a single person and €550 for a married couple. The age credit applies in addition to their basic personal credits. I have no plans to introduce a special tax band for pensioners as suggested by the Deputy.

Seán Haughey (Dublin North Central, Fianna Fail)
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Question 108: To ask the Minister for Finance the threshold for liability for capital acquisitions tax in the case of a child inheriting a €750,000 family home on the death of a father in view of the fact that this child moved back into the family home for three years prior to the death, to care for the deceased even though the child owns a separate apartment elsewhere; if these special circumstances can be taken into account in determining liability; if this threshold can be raised for Dublin properties in view of the higher prices in this region; and if he will make a statement on the matter. [42147/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Section 86 of the Capital Acquisitions Tax (CAT) Consolidation Act 2003 provides an exemption from CAT, in certain circumstances, for persons who acquire their family home by way of gift or inheritance. The relief was introduced in order to reduce the tax burden faced by individuals on receipt of the family home. The relief does not apply a threshold to the value of property that is being transferred.

In order to qualify for the relief, the beneficiary (i.e the person receiving the gift or inheritance) must have resided in the house for a minimum of 3 years prior to the gift or inheritance and must not have had an interest in any other dwelling house at the time of acquisition/inheritance. In addition, the beneficiary must continue to occupy that dwelling house as his or her only or main residence for a period of 6 years commencing on the date of the gift/inheritance. These conditions were included in the legislation in order to restrict the relief to genuine cases and avoid the relief being used as a means of tax avoidance. In the case referred to by the Deputy, the individual concerned would not qualify for relief under Section 86 as the individual has an interest in another property.

However, the CAT code includes group thresholds, below which no CAT is liable. Disposals from a parent to a child are exempt from CAT up to the value of €478,155. This threshold is increased on an annual basis in accordance with the CSO Consumer Price Index. Any other gifts/inheritance that might have been received within the same group by an individual since 5 December 1991 are also taken into account when applying the thresholds for the purposes of calculating CAT. If the total value of all inheritances and gifts received since this date is above the relevant threshold, then a 20% CAT will apply on the difference. In this regard, where the individual referred to by the Deputy has not received any other gifts or inheritances from his or her parents, he/she will only be liable to inheritance tax on the value of the property above €478,155.