Friday 30 September 2016

Inheritance tax rules favour the rich - expert

Charlie Weston Personal Finance Editor

Published 18/06/2015 | 02:30

Fine Gael's Catherine Noone
Fine Gael's Catherine Noone

THE rules on inheritance tax discriminate against middle-income families, a leading tax expert said.

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And half of the inheritance tax paid last year was in Dublin, MEP Brian Hayes has revealed.

Wealthy people can make gifts to their children that are greater than the exemption of €225,000 per child, as long as the amounts involved are "reasonable" when compared with their financial circumstances.

A Revenue guide to Capital Acquisitions Tax (CAT) - the formal name for inheritance tax - explains that people can get an exemption when making a gift to children, a wife, civil partner or other relative.

But the amount gifted has to be "reasonable, having regard to the financial circumstances of the disponer", according to 'Guide to the CAT treatment of receipts by children from their parents'.

Tax practitioner and former Revenue official Fiona O'Shea of Tax Network said rich people were able to use exemptions like this to avoid paying the tax.

"The extent that you can provide for your children, and avoid the tax, depends on whether you can show that you are wealthy. This is quite shocking and discriminatory," Ms O'Shea said.

"In contrast, people who scrimp and save all their lives, and are in debt, are more likely to be subject to the tax," she said.

And Fine Gael MEP for Dublin Mr Hayes said the Government needs to take a fresh look at the clear anti-Dublin bias that exists when it comes to inheritance tax.

Mr Hayes obtained figures which show that over 50pc of inheritance tax is paid from the Dublin area. Some €168.3m was paid by Dublin residents last year. This was out of a total of €328m, the MEP said.

The next largest amount was paid in Cork, but it was considerably less at €27.6m.

Meanwhile, a Fine Gael senator has backed the Irish Independent's campaign for lower inheritance taxes.

Fine Gael Senator Catherine Noone said the rate at which the tax is imposed is the seventh highest among countries that are members of the OECD (Organisation for Economic and Co-operation and Development).

The tax kicks in here at a much lower value than other western countries, she said.

Irish Independent

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