Written answers

Thursday, 15 May 2014

Department of Finance

Tax Reliefs Application

Photo of Brendan GriffinBrendan Griffin (Kerry South, Fine Gael)
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63. To ask the Minister for Finance his views on increasing the threshold for inheritance tax in the Budget 2015; and if he will make a statement on the matter. [21967/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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Capital Acquisitions Tax (CAT) is the overall title for both Gift and Inheritance Tax. The tax is charged on the amount gifted to, or inherited by, the beneficiary of the gift or inheritance. I assume the Deputy is referring to the "Group thresholds" for CAT.

For the purposes of CAT, the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary), determines the maximum life-time tax-free threshold known as the "Group threshold" below which gift or inheritance tax does not arise.

There are, in all, three separate Group thresholds based on the relationship of the beneficiary to the disponer.

Group A: tax free threshold €225,000 applies where the beneficiary is a child (including adopted child, stepchild and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.

Group B: tax free threshold €30,150 applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.

Group C: tax free threshold €15,075 applies in all other cases.

Where a person receives gifts or inheritances in excess of their relevant tax free threshold, CAT at a rate of 33% applies on the excess over the tax free threshold. These thresholds have been reduced in recent years as part of the effort to restore the public finances as taxes on capital are less harmful from an economic perspective than taxes on employment.

Preparations for Budget 2015 and the forthcoming Finance Bill have commenced. It would not be appropriate for me to comment on what changes, if any, are being considered in this area nor any other area.

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