48 BUSINESS forum
Money Matters By Cian Twomey Lecturer in Financial Economics, NUI Galway
4 May 2011
Tax Tips Coll & Co Chartered Accountants Pier Road, Barna, Galway t: +353 (0)91 592080 f: +353 (0)91 592081 e: firstname.lastname@example.org Are you planning to give a gift or leave an inheritance to family or friends? You should be aware of the tax implications involved. Capital acquisitions tax (CAT) is a tax paid by the person receiving the gift or inheritance, i.e. the ‘beneficiary’. The current amounts that can be received as a gift or inheritance without any liability to tax are as follows: Groups
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 capital acquisitions tax is 25 per cent and this is payable on the amount of the benefit which 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. Is a beneficiary required to file a CAT return even where there is no CAT liability? Potentially yes, once the value of a gift/inheritance exceeds 80 per cent of the tax free amounts in the table above, you must file a return with revenue disclosing details of the benefit. When does the tax have to be paid? The 2011 Finance Act brought forward the Pay and File date for CAT to 30 September. 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 30 September. 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 30 September 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 30 September in the following year. Valuation Date
Pay & File Date
1 Jan – 31 Aug 2011
30 Sept 2011
1 Sept – 31 Dec 2011
30 Sept 2012
Will the Inspector of taxes notify me to let us know a tax return is due? No. CAT is a self-assessed tax i.e. it is the taxpayers responsibility to calculate any tax due and file the details of any benefit received with revenue. Generally capital acquisitions tax (CAT ) returns must be filed electronically on ROS however paper returns can still be filed in certain circumstances. 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. Is now a good time to transfer assets to my children? With current low property and land values it may be a good time to consider passing assets to the next generation as the tax free thresholds may decrease and/or the tax rate (currently 25 per cent) may increase further next year. 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 which can result in an effective tax rate of 2.5 per cent on transfers of such property. The above information should be treated as a guide only. If you require assistance with your tax affairs, please contact Coll & Co Chartered Accountants, Barna, to arrange an appointment. They can be contacted by phone on 091-592080 or by email at info@ coll.ie. Coll & Co provides independent financial, taxation, including pensions and estate planning, services for private clients. Coll & Co Chartered Accountants is regulated by the Institute of Chartered Accountants to provide investment advice.
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