Colm Burke (Cork North-Central, Fine Gael)
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22. To ask the Minister for Finance if consideration will be given to increasing the small gift exemption for capital acquisitions tax from €3,000 to €5,000 from each person per year as it has not been increased for many years; and if he will make a statement on the matter. [28251/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Small Gift Exemption of €3,000 is an annual Capital Acquisitions Tax (CAT) relief available to all recipients of gifts. It should be noted that there is no limit on the number of small gifts a person can receive in a year from different donors. Finance Act 2003 increased the small gift exemption threshold from £1,270 to the current threshold of €3,000.

Furthermore, a wide variety of further exemptions and reliefs from CAT, and capital taxes more generally, are also available. In particular, for a gift from a parent to a child, CAT is only paid on the value of cumulative gifts above a lifetime tax-free threshold of €400,000. In other circumstances, including where gifts or inheritances are given by a grandparent to a grandchild, or gifts between siblings, CAT is only paid on the value of the gifts or inheritances above a lifetime threshold of €40,000. A tax-free threshold of €20,000 applies for instances of gifts or inheritances between individuals with relationships not covered by the other thresholds.

Additionally, there are numerous other generous Capital Tax reliefs available if a person meets the qualifying criteria including agricultural and business relief and the dwelling house exemption.

Capital Taxes, such as CAT, are vital in ensuring that individuals that benefit from gifts of assets are included within the tax net on an equitable basis. Wealth received through transfers from gifts or inheritances are notably different from income, as it is not earned or accumulated by the individual, but is received as a result of personal circumstances. In receiving unearned wealth in this way, inheritances and gifts can provide increased social mobility and opportunity for those who receive them. However, if concentrated amongst a few, they may perpetuate inequalities in these same areas. Consequently, an increase in the Small Gift Exemption threshold may hinder the effectiveness of the tax system to help reduce inequality across society.

I believe the relief in its current guise to be fair and providing an increase to the Small Gift Exemption must be balanced against competing demands and as part of the annual Budget and Finance Bill process.