Capital Acquisitions Tax (CAT) is really two taxes: Inheritance Tax which may apply when a person dies and leaves assets to another and Gift Tax which may apply when a person during his/her lifetime gives a gift to another. Both taxes are payable by the person who receives the gift or inheritance. Whether or not tax is payable depends on the value of the gift or inheritance and the relationship between the giver and the receiver.
CAT is subject to self-assessment. This means that you must declare your gifts and inheritances and assess the amount of tax due yourself. You may, of course, get professional help to do this. In general, you must pay the tax within four months of the valuation date. This is the date on which the assets are valued for CAT purposes and is the date the gift is received or probate is taken out. The Revenue Commissioners may allow the postponement of the tax due if there is hardship involved. In most cases, the payments may be spread over five years.
For further information and for forms, contact the
Capital Acquisitions Tax Information
Unit
CRIO 9/10 Upper O'Connell Street, Dublin 1.
Lo-call: 1890 201 104
Thresholds and rates
You may receive gifts and inheritances up to a certain value (threshold) without having to pay CAT. The amount involved depends on the relationship between the giver and the receiver and on other gifts/inheritances received. The current (2007) thresholds are:
Spouses
No CAT is payable if you receive a gift or inheritance from your spouse.
Group A - Children
A threshold of €496,824 applies to gifts/inheritances made by a person to his/her child or to a grandchild under the age of 18 whose parent is dead. Children include adopted and step-children and long-term foster children. Foster children must have been cared for and maintained for a continuous period of at least five years before the age of 18 and must have lived with the foster parents during that time.
This threshold also applies to certain nieces and nephews - the rules here are complex but, in general, it applies to nieces and nephews who have worked in the donor's business for five years before the business-related gift or inheritance was received.
Group B threshold - Other relatives
A threshold of €49,682 applies to gifts/inheritances from certain relatives including children, uncles, aunts, brothers, sisters, nephews, nieces, grandchildren and grandparents.
Group C threshold - Distant relatives and non-relatives
A threshold of €24,841 applies where there is not a relationship as described above for Group A or Group B.
For example, a cohabiting partner comes within this class.
Aggregation
Aggregation means that inheritances and gifts received after a certain date are added together for the purposes of the threshold.
If the inheritance or gift is received on or after 5 December 2001, then all inheritances and gifts received within the threshold group since 5 December 1991 are aggregated. So, for example, if you received a gift from a parent in 1995 and then inherited from a parent in 2007, the two amounts are added together. If they are greater than the current threshold figure, you are liable for CAT.
Rate of CAT
CAT is charged at 20% of the value of the gift or inheritance above the relevant threshold amount.
Family home
Under certain circumstances, there is no CAT on an inheritance of a family home. This, of course, is the case if you are the spouse or ex-spouse of the deceased but it is also the case if the house was your principal private residence or the principal private residence of the deceased person and
- You lived in the house for the three years prior to the transfer and
- You do not have an interest in any other residential property and
- You continue to own and live in the house for six years after the transfer.
However, this last condition does not apply if you are aged over 55. Provisions are also made for people who are unable to comply with this condition because of work commitments or illness.
Valuing the gift or inheritance
In general, the gift or inheritance is assessed at market value on the day the gift or inheritance is received.
There are special rules for agricultural property and family businesses.
Exceptions
There are a number of items which are not assessable for CAT. The most important are:
- The first €3,000 of gifts from one donor (this does not apply to inheritances)
- Superannuation benefits
- Winnings from the National Lottery (this means you do not pay tax when you receive the money - if you then make a gift of some to another person, the gift may be taxable as may the money when passed on inheritance)
- Gifts and inheritances for public or charitable purposes
- Payments made during the donor's life to family members for normal maintenance, support or education
- Certain works of art, scientific collections, houses and gardens of historic or artistic interest
- The proceeds of certain insurance policies designed to produce the money to pay CAT
- A gift or inheritance which is taken exclusively for the purpose of paying the medical expenses (including the associated cost of maintenance) of a permanently disabled person.
Further Information
The Revenue Commissioners have a leaflet What to do about tax when someone dies . It gives information on both the income tax and CAT rules. You can find the contact details for your regional Revenue office in the phonebook or at www.revenue.ie.
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