Michael Healy-Rae (Kerry, Independent)
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369. To ask the Minister for Finance if measures will be introduced to counter imbalances in the allocation of capital acquisitions tax (details supplied); and if he will make a statement on the matter. [62192/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Capital Acquisitions Tax (CAT) is a tax on gifts and inheritances that is payable by the beneficiary of a gift or inheritance on the value of the property received.

The relationship between the person providing the gift or inheritance (the disponer) and the person receiving it (the beneficiary) determines the tax-free threshold (Group threshold) below which CAT does not arise. Any prior gift or inheritance received by a person since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether any CAT is payable on a gift or inheritance. Where a person receives gifts or inheritances that are in excess of the relevant Group threshold, CAT at a rate of 33% applies on the excess. There are three Group thresholds.

The Group A threshold, which is the threshold relevant to the Deputy’s query, applies inter alia, where the beneficiary is a child (including adopted child, stepchild and certain foster children) of the disponer, and includes certain inheritances taken by a parent from their child. It was increased from €335,000 to €400,000 in Budget 2025. This threshold applies to any child of the disponer, regardless of their age.

As a general rule, the receipt by a person of an inheritance comprising a retirement fund is chargeable to CAT in the normal way. As such, CAT will be payable by the beneficiary on the value of the inheritance taken to the extent that its value exceeds the available Group threshold. However, this treatment is subject to certain exceptions.

In cases where the retirement fund is an Approved Retirement Fund (ARF), a Personal Retirement Savings Account (PRSA), a vested Retirement Annuity Contract (RAC) or a Pan-European Pension Product (PEPP) and the beneficiary was a child of the disponer and aged under 21 years of age on the date of death:

• the amount distributed from the retirement fund to the beneficiary will be exempt from Income Tax under section 784A(4)(b) of the Taxes Consolidation Act (TCA) 1997 for ARFs, section 787G(6) TCA 1997 for PRSAs, section 784(8) TCA 1997 for vested RACs and section 787AA(9) TCA 1997 for PEPPs, and
• the beneficiary will be subject to CAT on value of the inheritance received at the rate of 33%, to the extent that it exceeds the available Group A threshold (€400,000).

• the amount distributed from the retirement fund to the beneficiary will be charged to Income Tax at the rate of 30% (under section 784A(4)(c) TCA for ARFs, section 787G(6) TCA for PRSAs, section 784(8) TCA for vested RACs and section 787AA(9) for PEPPs), and
• the value of the inheritance taken by the beneficiary (net of the Income Tax payable) will be exempt from CAT under section 85 of the Capital Acquisitions Tax Consolidation Act 1997.