Budget week is upon us, albeit it looks like there won’t be many surprises.
As The Sunday Business Post’s tax columnist Brian Keegan put it in his column yesterday: “Tuesday’s budget will have the usual theatre surrounding it, even if the script is already largely known.”
Budget 2017 is likely to see some changes to the inheritance tax regime, as has been heavily flagged. It is expected that the amount children can inherit from their parents tax-free will be increased again, after jumping from €225,000 to €280,000 in last year’s budget.
With that in mind, here’s five things you need to know about capital acquisitions tax, the tax that applies to gifts and inheritance.
1) The amount you can inherit or be gifted tax-free varies depending on who is leaving or gifting it to you. A parent can give €280,000 to a child tax-free, while a gift or inheritance from another relative is only tax-free up to a threshold of just over €30,000. A gift or inheritance from a neighbour, friend or other acquaintance is tax free up to just over €15,000.
2) Any gifts or inheritances above the tax-free threshold are taxed at 33 per cent.
3) A gift or inheritance from a spouse or civil partner is exempt from CAT.
4) Other exemptions apply: for example, someone can give you €3,000 per annum tax-free annually under the small gift exemption.
5) Bear in mind that the tax-free thresholds for CAT are lifetime thresholds, and apply to all gifts and inheritances received, not just the current year.