I am advised by Revenue that if an individual receives a gift or inheritance, they may be required to file a Form IT38 and pay Capital Acquisitions Tax (CAT).
CAT applies to gifts and inheritances that are taxable in Ireland, where any one of the following three conditions exists A - the disponer is resident, or ordinarily resident, in Ireland for tax purposes B - the beneficiary is resident, or ordinarily, resident in Ireland for tax purposes or C - the property is situated in Ireland.
Where individuals are not tax-resident in the State, they can either submit the Form IT38 in person or employ an agent, such as a solicitor, who is resident in Ireland to pay and file on their behalf.
If a beneficiary is submitting the shorter version of the IT38 (IT38S), they only declare if the property is real property or other property. The long version of the IT38 is only filed when claiming a relief or exemption. The property is declared as A - All Irish B - All non-Irish C. Mix of Irish and non-Irish property.
The type of property is broken down further by dwelling house, agricultural property etc., but the purpose of the property is not declared on any return.
Revenue has further advised me that as the data on the Form IT38/SA.2 tax return is not recorded in the manner sought by the Deputy, there is no basis upon which to assess the impact of the Group A threshold and CAT arrangements on the intergenerational transfer and disposal of residential rental property.
In relation to the proposal to index-link the Group thresholds for gifts and inheritances, while I can appreciate where you are coming with this idea account needs to be taken of the following amongst other things:
Automatic index-linked CAT Thresholds would limit the governments ability to respond to changing fiscal conditions.
The current Group threshold structure provides a degree of certainty, both in the levels of thresholds available to the public and the tax yield generated. Index-linking the thresholds could produce ambiguity as to what thresholds will be available going forward in addition to the expected revenue.
Finally, the Deputy should note that any further changes to the thresholds must be considered among various other demands within the overall Budget package, as they have been in the past. In that regard, you should note that the CAT group thresholds are kept under review annually by my officials throughout the Finance Bill cycle.
