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Dail Éireann · 2025-02-13

Tax Code

FF John Connolly · Galway West

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Summary of this debate

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There is a perceived discrimination in the application of inheritance tax that impacts families who have no children of their own. The Deputy should note at the outset that capital acquisitions tax, CAT, is a beneficiary-orientated tax that is payable by the recipient of a gift or inheritance as opposed to the person providing that gift or inheritance.

The relationship between the person giving a gift or inheritance, the disponer, and the person who receives it, the beneficiary, determines the maximum amount, known as the "group threshold", below which CAT does not arise. The group A threshold is currently €400,000 and applies where the beneficiary is a child, including adopted child, stepchild and certain foster children of the disponer.

Built by scoring every sentence in the debate on how distinctive its language is, then quoting the highest-scoring ones back word for word and in the order spoken. Nothing is paraphrased or invented — if a sentence appears here, it was said in the chamber. Drawn from 311 words across 5 contributions by 2 speakers.

Most used terms in this debate

How often each word appears across the whole debate, ranked by how distinctive it is to this debate rather than common to all parliamentary language.

inheritance 6
disponer 3
cat 4
threshold 6
tax 7
beneficiary 3
lineal 2
descendant 2
applies 5
inheritances 2
consideration 6
gift 3

The full debate

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FF John Connolly

Gabhaim buíochas arís leis an gCathaoirleach Gníomhach agus tugaim leithscéal an Teachta Crowe don Teach.

I am sure that, like us all, the Minister has received substantial correspondence on this issue. There is a perceived discrimination in the application of inheritance tax that impacts families who have no children of their own. As the Minister will be well aware, strong bonds exist between aunts, uncles, nieces and nephews. Often in such situations, the nieces and nephews become the primary carers for their aunts or uncles. The income threshold is ten times greater for a child than it is for a niece or nephew. Is any consideration being given to amending those rules?

FG Paschal Donohoe

The Deputy should note at the outset that capital acquisitions tax, CAT, is a beneficiary-orientated tax that is payable by the recipient of a gift or inheritance as opposed to the person providing that gift or inheritance. The relationship between the person giving a gift or inheritance, the disponer, and the person who receives it, the beneficiary, determines the maximum amount, known as the "group threshold", below which CAT does not arise.

The group A threshold is currently €400,000 and applies where the beneficiary is a child, including adopted child, stepchild and certain foster children of the disponer. The group B threshold is currently €40,000 and applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant, such as a grandchild, of the disponer. The group C threshold is currently €20,000 and applies in all other cases. Gifts and inheritances between spouses and civil partners are exempt from CAT.

Where a person receives gifts or inheritances that are in excess of the relevant tax-free threshold, capital acquisition tax at a rate of 33% applies on the excess benefit. There are a number of exemptions and reliefs from this tax that may apply depending on the circumstances of the case, many of which do not require that any specific family relationship applies.

The Deputy will be aware that there would be a significant cost in making substantial changes to the CAT thresholds and those who can access them. Therefore, any consideration of this type must be balanced against competing demands and as part of the annual budget and finance Bill cycle.

FF John Connolly this contribution

I thank the Minister for the response. We are all aware when proposing any change that it must be balanced against other areas within the Exchequer. The concern is that some people are entering a phase of their lives where they must give consideration to this issue. Our worry is that what they are passing on to their relatives is as much a tax burden as an asset. There should be some consideration of that point. Consideration should be afforded by bringing forward some type of equity in respect of the inheritance of somebody's principal private residence. If a family is going to leave their home to a descendant, we should bring greater equity to the thresholds for that purpose.

FG Paschal Donohoe

I thank the Deputy. I am well aware of the kinds of issues he has raised. I am sure his constituents raise them with him. Times of inheritance are obviously difficult moments for families. Tax bills at times of sadness can be considerable. As I said in my earlier answer, any change to this form of taxation brings a particular, and perhaps significant, cost. That must be considered as part of our normal budgetary process. I certainly take on board what the Deputy has said. It is a matter that has been raised with me and other Ministers for Finance over the years. There are good reasons that decisions on the issue have not been made in the way in which the Deputy is advocating. In the time ahead, we will consider the issue again. I thank the Deputy for raising it.

FF John Connolly

I thank the Minister for his response and for giving the issue further consideration.

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