James Browne (Wexford, Fianna Fail)
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192. To ask the Minister for Finance the position regarding inheritance tax (details supplied); and if he will make a statement on the matter. [33317/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that for Capital Acquisitions Tax (CAT) purposes the relationship between the person giving a gift or inheritance (i.e. the disponer) and the person receiving 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. The respective thresholds apply to all gifts and inheritances received within the same Group - they are never doubled. Therefore, a child will not be entitled to a Group threshold of €670,000 in any circumstance.

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.

Accordingly, where a person receives a gift or inheritance from a parent, the Group A threshold of €335,000 applies. In the circumstances described by the Deputy, the receipt by each child of benefits from his or her surviving parent will be aggregated with any benefits received from the parent who has died for the purposes of determining whether the threshold of €335,000 has been exceeded.

In addition to the above, a person may receive gifts up to a total value of €3,000 from any person in any calendar year without having to pay CAT (the “small gifts exemption”). Gifts within this limit are not taken into account in computing tax and are not included for aggregation purposes. For the purposes of determining whether the small gifts exemption is due, the relationship between disponer and beneficiary are not relevant, and the exemption is not transferable. In the circumstances described by the Deputy, each child would be entitled to receive gifts up to the value of €3,000 from the surviving parent in any calendar year. Prior to the death of their other parent, each child would have been entitled to receive gifts up to the total value of €3,000 from each parent free of tax, potentially having a combined total value of €6,000 each year.