Dáil Éireann Debate, Tuesday - 19 May 2026
391. Deputy Michael Cahill asked the Tánaiste and Minister for Finance to urgently address an anomaly that exists with the current taxation system in respect of capital acquisition tax when applied to partners in comparison to married couples (details supplied); and if he will make a statement on the matter. [37098/26]
View answerCapital 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.
For CAT purposes, the relationship between the person giving a gift or inheritance (i.e. the disponer) and the person who receives it (i.e. the beneficiary) determines the maximum amount, known as the “Group threshold”, below which CAT does not arise. Finance Act 2024 increased each threshold, and the estimated cost was €88 million annually.
The Group A threshold (currently €400,000) applies where the beneficiary is a child of the disponer. For clarity it is useful to note that the definition for children for CAT purposes includes any stepchildren, adopted children or certain foster children. All can avail of the Group A threshold in respect of gifts and inheritances received from that disponer.The Group B threshold (currently €40,000) 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 (currently €20,000) applies in all other cases.
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 per cent applies on the excess benefit.
A full tax exemption applies to spouses and civil partners and inheritances between spouses and civil partners are not counted for the purposes of aggregating lifetime inheritances.
As you are aware, where a couple is cohabiting, rather than married or in a civil partnership, each partner is treated for tax purposes as a separate and unconnected individual. The difference in the tax treatment of co-habiting couples is not confined to CAT, and is also a feature of other tax heads, such as income tax.
Therefore, any change in the tax treatment of cohabiting couples in respect of inheritance tax could only be addressed in the broader context of the tax system and future social and legal policy development, bearing in mind the current constitutional requirement to protect the institution of marriage.
Furthermore, a gift or inheritance taken by a qualified cohabitant in accordance with a Court Order made under Part 15 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 is exempt from CAT. Part 15 of that Act provides for a redress scheme whereby court orders can be obtained in certain circumstances in relation to the transfer of property.
A “qualified cohabitant” is a person who has been in a committed and loving relationship with another person for a minimum period of 5 years (or 2 years where they are parents of one or more dependent children), whose relationship has ended due to death or separation and neither of whom was married to and living with another person in 4 of the 5 years immediately prior to the end of the relationship.
Finally, the Deputy should note that any further changes to CAT thresholds and exemptions 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 framework is kept under review annually by Department of Finance officials throughout the Finance Bill cycle.
