Written answers

Thursday, 27 September 2007

5:00 pm

Photo of Joe McHughJoe McHugh (Donegal North East, Fine Gael)
Link to this: Individually | In context

Question 49: To ask the Tánaiste and Minister for Finance if he plans to reduce the amount of inheritance tax a person has to pay for inheriting land from a relative, namely an aunt or uncle; and if he will make a statement on the matter. [21237/07]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

Inheritance tax is part of the capital acquisitions tax (CAT) code, which includes both gift tax and inheritance tax. It was first introduced in 1976 and replaced estate duty taxation. The Finance Act 2000 introduced a package of measures specifically designed to reduce the impact of CAT where assets are transferred. These measures included increased thresholds, the introduction of a single low rate of tax at 20% and the exemption of the family home in certain circumstances. These measures constituted the most radical reduction in the incidence of gift/inheritance tax since its introduction in 1976.

The CAT code includes group thresholds, below which no CAT is liable. The relationship between the person who provides the gift/inheritance (i.e. the disponer) and the person receiving the gift/inheritance (i.e. the beneficiary) determines the tax-free threshold applicable to the inheritance (the group threshold). There are three categories of relationship with regard to relief from CAT and these are increased on an annual basis in accordance with the CSO Consumer Price Index. The indexed group thresholds applying to a gift or inheritance for 2007 are set out in the table.

GroupRelationship to DisponerGroup Threshold 2007
â'¬
ASon/Daughter496,824
BParent/Brother/Sister/Niece/ Nephew/Grandchild49,682
CRelations other than Group A or B24,841

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, within the group, which were received since this date is above the relevant threshold, then a 20% CAT will apply on the difference.

Favourite niece/nephew relief is available to certain nephews and nieces who take a gift or an inheritance of a business or farm from the disponer. If the niece/nephew qualifies for the relief, they are treated as a child of the disponer for CAT purposes, and instead of a Group B threshold, they are entitled to a Group A threshold for the business or farm assets only. This means that if a gift or inheritance includes business/farm and non-business/farm assets the Group B threshold will apply to the non-business/farm assets and the Group A threshold will apply to the business/farm assets.

In order to qualify for the relief, the applicant must be a child of a brother or sister of the disponer (in other words, a nephew/niece in law will not qualify) and he/she must have worked substantially on a full-time basis for the disponer for a minimum of five years ending on the date of the gift or inheritance.

This relief is intended to take account of the close working relationship that exists between certain nieces/nephews and their uncles/aunts and was not intended to apply generally to all gifts or inheritances taken by nieces/nephews. Applying the relief to all such disposals would lead to a reduction in the tax base. I have no plans to introduce any changes.

Comments

No comments

Log in or join to post a public comment.