Changes to Capital Acquisitions Tax – Finance Act 2010
The Finance Act 2010 introduced a number of changes to the administration of gift and inheritance tax. Historically, a tax return and payment of tax must have been submitted within 4 months of the valuation date of a gift or inheritance.
The valuation date being the date on which:
- Market value of the property is ascertained,
- Tax is due and payable,
- Installments (where applicable) commence,
- Tax becomes a charge on the property,
- Test for farmer relief is applied.
Broadly speaking, the valuation date for a benefit is essentially the point in time at which the beneficiary becomes beneficially entitled in possession.
The 2010 Finance Act introduced a fixed pay and file date for gift/inheritance tax of 31st October, to align with the Income Tax pay and file deadline. All gifts and inheritances with a valuation date in the 12 month period ending on the previous 31st August will be included in the return (IT38) to be filed by 31st October.
Examples:
Valuation date 15 March 2011: File IT38 and pay tax by 31 October 2011
Valuation date 14 November 2011: File IT38 and pay tax by 31 October 2012
There is also an introduction of a surcharge for the late filing of a return.
- 5% (up to a maximum of €12,695) where the tax return is delivered within 2 months of the filing date.
- 10% (up to a maximum of €63,485) where the tax return is delivered after 2 months of the filing date.
Other changes include;
- Abolition of the status of CAT as a charge on property that has been the subject of a gift or inheritance in the previous 12 years.
- Abolition of secondary accountability i.e. where the beneficiary fails to pay the tax due and the person secondarily liable has control over the property passing.
- Requirement to appoint an Irish-resident “agent” who will be responsible for pay and file procedures where beneficiaries are non-resident.
Current Gift/ Inheritance Tax thresholds:
- Parent to Child €414,799
- Blood Relative €41,481
- Others €20,740
Rates:
- Threshold Amount - Nil
- Balance - 25%
For further information contact Cliodhna Grant, OSK Tax or visit our tax section.
