CAPITAL ACQUISITION TAX
MALONE & CO.
Capital Acquisitions Tax (CAT) arises on the gift or inheritance of an asset. Once the taxable value of a gift or inheritance is determined, the amount of CAT to be paid varies depending on the relationship between the beneficiary (person receiving the gift or inheritance) and the person who provided the gift or inheritance (disponer). The gift/inheritance is valued for CAT purposes on the date the beneficiary becomes entitled to it. The total amount of the gift/inheritance taxable is the market value minus allowable deductions such as funeral expenses (in the case of an inheritance), legal costs or any debts which must be paid by law.
The level of CAT owed to the revenue will depend on the relationship between the disponer and the beneficiary. Any gift or inheritance received that exceeds the beneficiary’s group tax exemption threshold is taxed at the rate of CAT which is now 33%. The tax exemption thresholds are as follows:
Post 14.10.15 Threshold
Group A – Son/Daughter (including step child or adopted child), Parents, in cases of inheritance of disponer.
Group B – Brother/Sister, Niece/Nephew, Parent, Grandchild/Great Grand Child of disponer.
Group C – Any relationship to disponer not included in Group A or Group B
The beneficiary of the gift/inheritance is responsible for ensuring that any CAT owed is paid within four months of the valuation date. If you are non-resident then you must appoint a third party, such as a solicitor or accountant to take responsibility for the payment of CAT to the Revenue.
Subject to certain conditions, there are a number of exemptions from CAT as follows:
- Gifts or inheritances between spouses.
- The first €3,000 of taxable gifts from one individual to another in a calendar year.
- Payments for damages or compensation.
- Gift or inheritance of a dwelling house which is your main residence.
- Benefits received for charitable purposes.
- Business Relief – applies to gift or inheritance of business property.
- Agriculture Relief – applies to gift or inheritance which consists of agricultural property such as land or machinery.