Written answers

Tuesday, 21 June 2022

Photo of Michael FitzmauriceMichael Fitzmaurice (Roscommon-Galway, Independent)
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163. To ask the Minister for Finance if he will raise the capital acquisitions thresholds between aunt and uncles to nieces and nephew; and if he will make a statement on the matter. [31930/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy is aware, for Capital Acquisitions Tax (CAT) purposes, the relationship between the person giving a gift or inheritance (i.e. the disponer) and the person who receives it (i.e. the beneficiary) determines the maximum amount, known as the “Group threshold”, below which CAT does not arise.

The Group A threshold (currently €335,000) applies, inter alia, where the beneficiary is a child (including adopted child, stepchild and certain foster children) of the disponer. The Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant such as a grandchild of the disponer. The Group C threshold (currently €16,250) applies in all other cases. 

Any prior gift or inheritance received by a beneficiary since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether any tax is payable on a benefit. Where a person receives gifts or inheritances that are in excess of his or her relevant tax-free threshold, CAT at a rate of 33% applies on the excess benefit.

Accordingly, where a person receives a gift or inheritance from his or her aunt or uncle, the Group B threshold of €32,500 will apply.  CAT will be payable by the person at a rate of 33% to the extent that the benefit received, when aggregated with any prior gift or inheritance received since 5 December 1991, exceeds this threshold. 

Nieces or nephews of the disponer may qualify for favourite niece or favourite nephew relief in respect of gifts or inheritances of business assets. The relief allows a niece or nephew who qualifies for the relief to avail of the Group A threshold. Qualifying nieces or nephews are those who have worked substantially on a full-time basis for a period of five years prior to the gift or inheritance being given in carrying on, or assisting in the carrying on, the trade, business or profession, of the disponer. 

For the nephew or niece to be deemed to be working substantially on a full-time basis in the business he or she must work:

- more than 24 hours per week at the place where the business, trade or profession is carried on; or  

- more than 15 hours per week at the place where the business, trade or profession is carried on exclusively by the disponer, any spouse or civil partner of the disponer and the nephew or niece.

The options available for providing increases to CAT thresholds are considered in the context of available resources as part of the annual budgetary process and like all matters need to be balanced against competing demands.  At the moment, I do not believe that a compelling case can be made for increasing the CAT Group threshold that applies between aunt and uncles to nieces and nephew.

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