Catherine Connolly (Galway West, Independent)
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139. To ask the Minister for Finance if his attention has been drawn to an anomaly (details supplied) under the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010; the options available to a person in such a position; if this anomaly will be investigated as a matter of urgency; and if he will make a statement on the matter. [26368/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that section 88A of the Capital Acquisitions Tax Consolidation Act 2003 exempts transfers made between qualified cohabitants within the meaning of Part 15 of the Civil Partnership and Certain Rights and Obligations of Cohabitants (CPCROC) Act 2010.

Part 15 provides for a redress scheme where court orders can be obtained in certain circumstances in relation to the transfer of property. This applies to qualified cohabitants, i.e. persons who have been in a committed and loving relationship with another person for a minimum period of 5 years (2 years where they are parents of one or more dependent children), whose relationship has ended due to death or separation and neither of whom was married to and living with another person in 4 of the 5 years immediately before the end of the relationship.

In a case of intestacy, or where a deceased qualified cohabitant has failed to provide in a will for the other qualified cohabitant, the surviving qualified cohabitant can apply for a court order under Part 15 of the CPCROC Act 2010. The court, in considering the application, will take into account a number of factors including the financial circumstances of the applicant and the claim of any other relevant parties to benefits from the deceased’s estate. If the applicant obtains a court order for the transfer of property, then the property transferring will be exempt from inheritance tax.

Where a cohabitant has specifically provided for a surviving cohabitant in his or her will, the usual inheritance tax provisions apply. While transfers between spouses and civil partners are exempt from inheritance tax, a tax-free threshold (Group Threshold), below which inheritance tax does not arise, applies in the case of other types of relationship between the person who provides the inheritance (i.e. the disponer) and the person who receives the inheritance (i.e. the beneficiary).

There are three separate Group Thresholds. The Group A threshold (currently €310,000) applies, inter alia, where the beneficiary is a child (including adopted child, step-child and certain foster children) or minor child of a deceased child of the disponer. The Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer. The Group C threshold (currently €16,250) applies in all other cases, including cohabiting couples.

The redress scheme introduced for formerly cohabiting couples under the CPCROC Act 2010 provided protection in law for long-term cohabiting couples and provided safeguards for an economically dependent cohabitant where a relationship ended or on death. The introduction of an exemption from inheritance tax was part of a suite of changes to the Tax Acts consequent on the redress provisions. Thus, a transfer of property under a redress court order is not liable to stamp duty, the transferor of property does not have a capital gains tax liability on the transfer and the recipient of property is not liable to gift tax or inheritance tax. Without these changes, the cohabiting couple would be treated as unconnected individuals and full charges to each of these taxes could arise.

The introduction of the exemption from gift tax and inheritance tax in these cases was not intended to give cohabiting couples the same tax treatment as married couples or civil partners but simply legislated for the tax consequences of the redress arrangements for cohabitants under the CPCROC Act 2010.