Did you receive a gift or inheritance in the period 1 September 2011 – 31 August 2012? If so, you may have a Capital Acquisitions Tax filing requirement.
When does the tax have to be paid?
The Pay and File date for Capital Acquisitions Tax (CAT) is 31 October. All gifts and inheritances with a valuation date in the 12 month period ending on the previous 31 August must be paid and filed by 31 October.
This means, if the valuation date is between 1 January and 31 August, you must complete the tax return and pay the tax on or before 31 October in that year. If the valuation date is between 1 September and 31 December, you must complete the tax return and pay the tax on or before 31 October in the following year.
Pay & File Date
1 Jan – 31 Aug 2012
31 Oct 2012
1 Sept – 31 Dec 2012
31 Oct 2013
Capital Acquisitions Tax is a tax paid by a person receiving a gift or inheritance, i.e. the ‘beneficiary’. The current amounts that can be received as a gift or inheritance without any liability to tax for the beneficiary are as follows:
Relationship between the parties
Tax free amounts
Parent to Child
Relationship other than above e.g. gifts to/from unmarried partners, distant relatives, friends etc
How do I calculate the tax due?
The current rate of CAT is 30% in respect of gifts and inheritances taken on or after 7 December 2011. This is payable on the amount of the benefit that exceeds the tax free thresholds as outlined above. It is important to note that all benefits taken from a disponer within the same group, e.g. A, B or C, since 5 December 1991 must be aggregated when calculating the tax due on the current benefit.
Will the inspector of taxes notify me if I have to file a return?
A beneficiary is required to file an IT38 return where the total value of gifts and inheritances received since 5 December 1991 exceeds 80% of the relevant group threshold.
CAT is a self-assessed tax, i.e. it is the taxpayer’s responsibility to calculate the tax due and file the details of any benefit received with Revenue. Generally, CAT returns must be filed electronically on ROS, however paper returns can still be filed in certain circumstances.
Revenue will issue a return form to individuals who they understand may have a requirement to file a return. However, as noted above, the obligation to pay and file a return rests with the taxpayer whether or not a notification to file is received.
What happens if I am late in the filing of my tax return?
There is a surcharge for late submission of a CAT return and also potential interest on late payment.
Are there any exemptions from Capital Acquisitions Tax?
Yes. The following are the main exemptions from CAT:
- A gift or inheritance received from a spouse is exempt from CAT;
- An individual can take a gift of up to €3,000 tax-free each year from multiple individuals;
- There is an exemption from CAT in relation to the gift/inheritance of a dwelling house subject to certain conditions;
- Gifts/inheritances for public or charitable purposes are generally exempt from CAT;
- There is a generous relief in relation to the amount of tax due on the gift/inheritance of business and agricultural property.
The above information should be treated as a guide only. If you would like assistance with your tax affairs, contact Coll & Co Chartered Accountants, Barna by phone on 091-592080 or by email at email@example.com. Coll & Co specialises in personal tax and pensions advice. Coll & Co, Chartered Accountants is regulated by the Institute of Chartered Accountants to provide investment advice.