Capital Acquisitions Tax (CAT) in Ireland is a tax levied on gifts and inheritances received by individuals. It is important to understand the various options and bands associated with CAT to effectively manage your estate and tax liabilities.
Taxable Persons and Thresholds:
CAT applies to both resident and non-resident individuals who receive gifts or inheritances in Ireland or abroad.
The thresholds for CAT differ depending on the relationship between the disponer (the person giving the gift/inheritance) and the beneficiary (the recipient).
There are three main groups for CAT purposes: Group A, Group B, and Group C.
Group A:
Group A includes gifts and inheritances received by a child from their parent.
Group A threshold was €335,000.
Any amount above this threshold is subject to CAT at a rate of 33%.
Group B:
Group B includes gifts and inheritances received by a child from a sibling, an uncle or aunt, a niece or nephew, or a grandchild.
The Group B threshold was €32,500.
Amounts above this threshold are subject to CAT at a rate of 33%.
Group C:
Group C includes gifts and inheritances received by individuals who do not fall into Group A or Group B.
This category encompasses gifts and inheritances between unrelated individuals or distant relatives.
The Group C threshold was €16,250.
Any amount above this threshold is subject to CAT at a rate of 33%.
Tax Rates:
As mentioned, the tax rate for CAT is 33% for amounts above the relevant threshold.
The tax is calculated on the value of the gift or inheritance received by the beneficiary.
The tax liability is the difference between the value of the gift/inheritance and the applicable threshold, multiplied by the tax rate of 33%.
Exemptions and Reliefs:
There are various exemptions and reliefs available to reduce CAT liabilities.
Agricultural Relief: Provides relief for agricultural property transfers, allowing for a reduced taxable value.
Business Relief: Offers relief for the transfer of business assets, reducing the taxable value.
Dwelling House Relief: Provides relief for the transfer of a dwelling house to a dependent relative.
Small Gift Exemption: Allows for small gifts up to €3,000 per year to be exempt from CAT.
It is crucial to consult with a tax advisor or solicitor for comprehensive advice on CAT, as tax laws and thresholds can change over time. They can provide up-to-date information, guidance on exemptions and reliefs, and help you structure your estate plan to minimize CAT liabilities.
It is always recommended to seek professional advice for the most accurate and current information relevant to your specific situation.
