Gift and Inheritance tax, also known as Capital Acquisitions Tax (CAT) may be due on assets you receive from a person’s estate when they die.
Tax may also be due on gifts you receive.
Estates typically consist of assets like money, shares, property and possessions.
The amount of tax you must pay depends on the value of the estate and the current CAT rate.
CAT is due on all inheritances and gifts over certain thresholds. The tax-free threshold depends on your relationship to the deceased person.
Group A
The Group A threshold applies where you, the beneficiary, on the date of the gift or inheritance are:
- a child of:
- the disponer
- or
- the disponer’s civil partner
- a minor child, under 18 years of age, of a deceased child of:
- the disponer
- or
- the disponer’s civil partner
- a minor child of the civil partner of a deceased child of:
- the disponer
- or
- the civil partner
- a foster child of the disponer, in certain circumstances
- or
- a parent of the disponer and you inherit an absolute interest of an inheritance on the death of your child. An inheritance of a limited interest does not qualify for the Group A threshold.
Group B
The Group B threshold applies where you, the beneficiary, on the date of the gift or inheritance are:
- a parent of the disponer, where you take a gift or a limited interest
- a brother or sister of the disponer
- a child of a brother or sister of the disponer
- a child of the civil partner of a brother or sister of the disponer
- a lineal ancestor of the disponer, such as a grandparent
- or
- a lineal descendant of the disponer such as a grandchild (other than a lineal descendant referred to in group A).
If you, the beneficiary, were fostered, the Group B threshold may be available if the gift or inheritance is received from:
- a relative of your foster parent
- or
- a person who was also fostered by your foster parent.
Group C
The Group C threshold applies where you, the beneficiary, on the date of the gift or inheritance do not have a relationship to the disponer covered in Groups A or B.
So… how much can you receive before being taxed?
The current thresholds are as follows:
Group A – €335,000
Group B – €32,500
Group C – €16,250
If the value of your inheritance exceeds the threshold the excess is taxed at 33%
Example:
Anne receives an inheritance from an Uncle of €50,000
The relevant Group would be B so Anne must pay tax at 33% on the balance over €32,500
So, €50,000 less €32,500 = €17,500 @ 33% – tax is €5775
In the case of a gift there is a relief called a Small Gift Exemption
For each year the first €3,000 of a gift(s) will be exempt from tax
Example
Anne receives a gift from an Uncle of €50,000
The relevant Group would be so Anne must pay tax at 33% on the balance over €32,500, however the first €3,000 is exempt
So, €50,000 less €3,000 less €32,500 = €14,500 @ 33% – tax is €4,785
Aggregation
You must include all other taxable gifts or inheritances taken from any source within the same group threshold, on or after 5 December 1991.
Example
Anne receives an inheritance from an Uncle of €15,000
She had previously (2002) received an inheritance from an Aunt of €40,000
The relevant Group would be B so Anne must pay tax at 33% on the balance over €32,500
So, €15,000 plus €40,000 = €55,000 @ 33% – tax is €18,150
Take Note!!
You are required to file a return if the taxable value of the gift or inheritance exceeds 80% of the relevant group threshold.
Even though no tax would be due in this scenario.
