Fianna Fáil Finance Spokesperson Michael McGrath TD has said any changes to inheritance tax thresholds in forthcoming budgets should be applied fairly in a manner that reflects the diversity of family structures in Irish society.
New figures provided to Deputy McGrath indicate that the yield from Capital Acquisitions Tax, which is applied to gifts and inheritances, has increased by over 65% since 2011. This follows massive reductions in the thresholds in recent years resulting in a major increase in the number of transactions caught in the tax net.
The figures also reveal that in 2015 the largest category (33%) of inheritance cases was in respect of nieces and nephews followed by gifts / inheritances involving what is known as “strangers in blood” (23%). A total of 21% were in respect of a sibling, while only 18% of cases involved a child of the disponer.
Deputy McGrath commented, “It is every person’s wish to provide financial security for family members and people close to them. People will naturally want to be able to pass on the benefits of their lifetime’s work to their children, grandchildren and other family members depending on their particular circumstances.
“As it stands, Minister Noonan plans to increase the Group A (parent to child) threshold from €280,000 to €500,000 but leave the Group B (other blood relative) and Group C (stranger in blood) thresholds unchanged. These are already at very low levels of €30,150 and €15,075 respectively and were not changed in Budget 2016 when the Group A threshold was raised by nearly 25%.
“As can be seen from the figures provided to me, the proposal not to change the Group B and Group C thresholds does not reflect the very large number of inheritance tax cases which involve family members other than children and also those involving non family members.
“A failure to change the Group B and C thresholds would be particularly unfair to people who do not have children but have relatives they wish to provide for. Fianna Fáil has been campaigning for some time for greater fairness in relation to how inheritance tax applies in Ireland.
“Some progress has been made in relation to inheritances between parents and their children. However there are many other issues which must also be considered including the cases of other family members and the interest rate which applies when a person seeks a deferral of a Capital Acquisitions Tax bill. This is currently set at a penal rate of 8%. I look forward to debating these issues with the Minister for Finance over the coming weeks.”