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CAT Planning

If you receive a gift, you may have to pay Gift Tax on it. If you receive an inheritance following a death, it may be liable to Inheritance Tax. Both these taxes are types of Capital Acquisitions. The benefit (the gift or inheritance) is taxed if its value is over a certain limit or threshold.

Different tax-free thresholds apply depending on the relationship between the disponer (the person giving the benefit) and the beneficiary (the person receiving the benefit). There are also a number of exemptions and relief’s that depend on the type of the gift or inheritance. At FMB we have successfully advised many individuals in relation to utilising relief’s and exemptions from CAT which has allowed a significant reduction or complete avoidance of tax on certain capital transactions.

If you receive a gift or inheritance from your spouse or civil partner, you are exempt from Capital Acquisitions Tax. The tax applies to all property that is located in Ireland. It also applies where the property is not located in Ireland but either the person giving the benefit or the person receiving it are resident or ordinarily resident in Ireland for tax purposes.

Groups Thresholds

Gifts and inheritances can be received tax-free up to a certain amount. The tax-free amount, or threshold, varies depending on your relationship to the person giving the benefit.

Group A: This applies where the person receiving the benefit is a child of the person giving it. This includes a stepchild or an adopted child.

Group B: This applies where the beneficiary is the:

  • Parent
  • Grandparent
  • Grandchild or great-grandchild
  • Brother or sister
  • Nephew or niece of the giver

If a grandchild is a minor (under 18 years of age) and takes a gift or inheritance from his or her grandparent Group A may apply if the grandchild’s parent is deceased.

FMB Chartered Accountants are experts in Taxation. For information and advice, email us at enquiry@fmb.ie or call 01 645 2002. You can also sign up for our quarterly newsletter full of tips and updates on topical issues which are of interest to our clients and followers.

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