Gerald Nash (Louth, Labour)
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166. To ask the Minister for Finance the number of disposals of a business by a parent to a child in the years 2020 to 2023 inclusive; the number of disposals of companies valued at over €10 million for each of the relevant years where the business is being transferred to the next generation of children; his plans to introduce a new €10 million cap on the retirement relief capital gains tax exemption; the estimated number of businesses/individuals will be impacted by the planned changes in the first year of the new regime; and if he will make a statement on the matter. [23824/24]

Michael McGrath (Cork South Central, Fianna Fail)
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Finance Act 2023 introduced amendments to section 599 of the Taxes Consolidation Act 1997 which grants relief from Capital Gains Tax on the disposal by individuals aged 55 and over of qualifying business or farm trade assets to that individual’s child. This relief is known as Retirement Relief.

Currently the relief is unrestricted in respect of disposals of qualifying assets by individuals aged 55 to 65. For individuals aged 66 or over, the relief is capped by reference to assets with a market value of €3 million.

The amendments extend the upper age limit for the relief from 65 until the age of 70. The reduced relief which was available on disposals from age 66 onwards will now apply from age 70.

The amendments also introduced a new lifetime limit of €10 million on the value of qualifying assets in respect of which relief is available for disposals made by individuals from the age of 55 until the age of 70. This aspect of the amendment was informed by recommendation 7.3 contained in the Commission on Taxation and Welfare Report which recommended a lifetime limit on all disposals of businesses or farms to children.

While these changes were legislated for in Finance Act 2023 they will come into effect from 1 January 2025 so as to allow for an appropriate transitional period.

I am advised by Revenue that the available information in relation to Capital Gains Tax retirement relief is as published on the Revenue website at www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/index.aspx for years up to 2022, the latest year available.

In relation to the number of disposals of a business by a parent to a child the number of disposals within the family for the years 2020 to 2022 is as shown in the table below:

I am further advised by Revenue that the number of disposals in the table above associated with consideration exceeding €10 million cannot be provided due to taxpayer confidentiality and the low number of claimants involved. The number of taxpayers impacted by the proposed change in the limits to €10 million from 1 January 2025 is not available as this will depend on future disposals of the relevant assets, associated gains from these disposals and the impact of behavioural change as a result of these proposed changes.