Catherine Byrne (Dublin South Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

To ask the Minister for Finance if he will outline the current rules in respect of discretionary trust tax; the procedure for compliance with this tax in respect of persons deceased in 2012; and if he will make a statement on the matter. [51376/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am informed by the Revenue Commissioners that in the absence of details of a specific case it is only possible to reply in general terms. The assets in a Discretionary Trust are chargeable to Discretionary Trust Tax when the settlor dies or when the youngest “Principal Object” of the trust attains the age of 21 years. In this context, “Principal Object” is defined as the settlor’s spouse, civil partner, child of a civil partner or child of a pre-deceased child. The assets are chargeable to Discretionary Trust Tax while they remain in a Discretionary Trust.

Discretionary Trust Tax is chargeable as follows:

(i) A once-off 6% charge on the value of the assets in a trust

Where the trust is created during the lifetime of the settlor (assuming there are no Principal Objects under the age of 21 years) the tax becomes chargeable at the date of death of the settlor.

Where there are Principal Objects under the age of 21 years, the tax becomes chargeable on the date on which the youngest of the Objects attains the age of 21 years or, if later, when the administration of the estate has been completed and the extent of the residue has been ascertained.

In the case of a Discretionary Trust created under the terms of the will of the settlor, the tax becomes chargeable when the administration of the estate has been completed and the extent of the residue has been ascertained.

(ii) An annual 1% charge arising on 31 December of each year on the value of the assets of the trust at that date (assuming there are no Principal Objects under the age of 21 years). Where there are Principal Objects under the age of 21 years, the tax becomes chargeable on 31 December in the year in which the youngest of the Objects attains the age of 21 years or, if later, when the administration of the estate has been completed and the extent of the residue has been ascertained. This 1% charge does not apply in a year where 31 December occurs in the twelve months immediately following the date on which the 6% charge arose.

Discretionary Trust Tax returns (Form IT4 for the 6% initial charge and Form IT32 for the 1% annual charge) must be filed together with payment of the tax due, within these time limits:

- For the initial once-off charge; within 4 months of the due date.

- For the annual 1% charge; within 4 months of 31 December of each year.