Written answers

Thursday, 23 June 2016

Photo of Seán BarrettSeán Barrett (Dún Laoghaire, Fine Gael)
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44. To ask the Minister for Finance his plans to increase upwards the limits to inheritance tax; and if he will make a statement on the matter. [17496/16]

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.

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:

The Group Atax free threshold of €280,000, increased from €225,000 in Budget 2016, 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.

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

The Group Ctax free threshold €15,075, applies in all other cases.

I raised the Group Atax-free threshold applying to gifts and inheritance from parents to their children from €225,000 to €280,000 in Budget 2016. This represented an increase of about 25%. I did this in recognition of the improving state of the public finances and of the concerns expressed to me by people making and receiving gifts and inheritances, particularly in a context of rising property prices.

I indicated at the time that I saw the change to the Group A tax- free threshold as the start of a process. The extent to which increases in the various tax-free thresholds for CAT purposes can be accommodated in the future will depend, among other things, on the continuing economic recovery and the competing choices for limited resources.  The Deputy will be aware of the commitment in the Programme for a Partnership Government to work with the Oireachtas to raise the Group A CAT tax-free threshold (including all gifts and inheritances from parents to their children) to €500,000.

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