Capital acquisition tax (CAT) is charged when a person either receives or gives a gift or an inheritance.
Capital acquisition tax is made up of two separate taxes:
A Gift Tax payable on lifetime gifts
An Inheritance Tax payable on inheritances received on a death.
Who is liable to this tax in Ireland?
The person receiving the gift or inheritance is primarily liable for the payment of inheritance tax.
If the giver or the receiver of the gift of inheritance is resident or ordinarily resident in Ireland, the entire estate will be liable to inheritance tax.
If both the giver and receiver are not resident or ordinarily resident in Ireland, then only Irish property will be liable to tax.
Who pays the Capital Acquisition Tax?
The person receiving the gift or inheritance is liable to CAT.
What assets are liable to Inheritance Tax?
A list of all assets and liabilities will be prepared by the representative of the deceased who will also complete a tax return in relation to Inheritance Tax. Tax is levied on the total net value of all assets received by the receiver of the gift, other than a legal spouse.
All assets are taken into account, the family home, an investment property, the total value of all savings, investments, pensions and life assurance policies. Contents of the house will also be taken into consideration.
Reliefs and Exemptions:
The main exemptions/reliefs are
1. Spouse Exemption- Gifts or inheritances received by one spouse from the other are totally exempt from CAT
2. Agricultural Relief –the value of farmland etc can be reduced in certain circumstances
3. Business Relief – can provide a similar reduction of 90 in certain circumstances
4. Family Home Relief – exemption from Gift & Inheritance Tax is available in certain circumstances
5. Life Assurance Relief – If you take out a life assurance plan, specifically for Inheritance Tax, the funds paid out on the plan will not be subject to Inheritance Tax – provided they are actually used to pay the tax bill. All reliefs are highly qualified.
For further information in relation to this, please contact Noelette Hassett at firstname.lastname@example.org