Capital Acquisitions Tax comprises of Gift Tax, Inheritance Tax and Discretionary Trust Tax
If you receive a gift, you may have to pay gift tax on it. If you receive an inheritance following a death, it may be liable to inheritance tax.
The benefit (gift / inheritance) is taxed if its value is over a certain limit or threshold. Different tax-free thresholds apply depending on the relationship between the disponer and the beneficiary.
| GROUP A | Applies where the beneficiary is a child (including adopted child, step-child and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child. |
| GROUP B | Applies where the beneficiary is a brother, sister, niece, nephew or lineal ancestor or lineal descendant of the disponer. |
| GROUP C | Applies in all other cases. |
| Group A | Group B | Group C | |
| On or after 9 October 2019 | €335,000 | €32,500 | €16,250 |
| 10 October 2018 – 08 October 2019 | €320,000 | €32,500 | €16,250 |
| 12 October 2016 – 09 October 2018 | €310,000 | €32,500 | €16,250 |
| 14 October 2015 – 11 October 2016 | €280,000 | €30,150 | €15,075 |
| 06 December 2012 – 13 October 2015 | €225,000 | €30,150 | €15,075 |
| 07 December 2011 – 05 December 2012 | €250,000 | €33,500 | €16,750 |
The above are lifetime limits for each threshold.Gifts and Inheritances that exceed the Threshold Amounts are subject to Capital Acquisitions Tax at 33%
Payment of Capital Acquisitions Tax and Filing of CAT Return
Capital Acquisitions Tax is charged on a self-assessment basis and is payable by reference to the Valuation Date, the date on which the beneficiary is beneficially entitled to the benefit.
There is a requirement to file a return with Revenue (Form IT38s) where the total value of gifts / inheritances received since 5th December, 1991 is in excess of 80% of the relevant tax free group threshold.
Pay and file dates are:
- on or before 31st October, if the valuation date falls between 1st January and 31st August in the same year, or
- on or before 31st October of the following year, if the valuation date falls between 1st September and 31st December in the previous year.
Exemptions
The main exemptions are;
Small Gifts Exemption
The first €3,000 of the taxable value of a taxable gift taken in a calendar year is exempt. The beneficiary gets one exemption for each donor. The donor gets one exemption for each donee.
Spouses’ Exemption
Property taken from a spouse is exempt from Capital Acquisitions Tax.
Dwelling House Exemption
A dwelling house may be gifted or inherited free of Capital Acquisitions Tax provided the donee / successor:
- occupied the dwelling house as his or her only or main residence for the three years immediately preceding gift or inheritance;
- is not at the date of the gift or inheritance beneficially entitled to any other dwelling house or to any other interest in any other dwelling house;
- the donee / successor must continue to occupy that dwelling- house as his/her only/main residence for a period of 6 years commencing on the date of the gift/inheritance
- The recipient must continue, except where such recipient was aged 55 years or more at the date of the gift or inheritance or has died, to occupy that dwelling- house as his/her only/main residence for a period of 6 years commencing on the date of the gift/inheritance
Reliefs
The main reliefs are;
Business Relief
To qualify, the property must be a “relevant business property” being carried on by a sole trader or by a partnership.
The relief will amount to a reduction of 90% in respect of the value attributable to relevant business property taken by the beneficiary. The relief is withdrawn if the property is disposed of within six years of the date of the gift / inheritance and the proceeds are not reinvested within one year of the disposal.
To qualify for the relief, the relevant business property must have been owned for a continuous period of 5 years prior to the date of the gift / inheritance. However, if the inheritance is taken on the death of the disponer the relevant period is 2 years prior to the date of the inheritance.
A Business Relief Claim must be made online by filing an IT38 through Revenue’s online service (ROS).
Agricultural Relief
The relief operates by reducing the market value of ‘agricultural property’ by 90%, so that gift / inheritance tax is calculated on an amount – known as the ‘agricultural value’ – which is substantially less than the market value.
Agricultural property means:
- agricultural land, pasture and woodland situated in a Member State of the European Union
- crops, trees and underwood growing thereon;
- houses and other farm buildings appropriate to the property; and
- crops, trees and underwood growing thereon;
- houses and other farm buildings appropriate to the property; and
- A payment entitlement (within the meaning of Council Regulation (EU) No. 1782/2003 of 29 September 2003)
To qualify for agricultural relief, the individual receiving the gift or inheritance must be a ‘farmer’ at the Valuation Date.
A ‘farmer’ means: an individual in respect of whom at least 80% of his or her assets, after taking a gift / inheritance, consist of agricultural property on the valuation date of the gift / inheritance. The ‘80%’ test does not apply in the case of agricultural property consisting of trees and underwood.
