Law Society calls for CAT threshold increase
The Law Society of Ireland has called for Capital Acquisitions Tax (CAT) thresholds to be raised in the State’s 2016 Budget, calling the current levels “punitive”.
Ken Murphy, director-general of the Law Society, said the lawyers’ body had become “increasingly concerned about the effects of the CAT tax system in Ireland”.
He said that Ireland “has one of the most penal inheritance tax systems in the world” and that Irish people “suffer from a lethal combination of both a punitive rate of CAT tax and a severely low threshold”.
The current thresholds are €225,000 for a child inheriting from their parents; €30,150 for siblings, nieces/nephews and grandchildren; and €15,075 for all others.
Mr Murphy said: “These inheritance tax thresholds were never intended to catch ordinary people in the tax net. Inheritance tax was meant to tax people who receive exceptionally large inheritances, not modest three bedroom semi-ds.
“The Law Society is calling on the Government to increase all CAT thresholds. Specifically, the inheritance tax threshold for children should be raised to €350,000 at a minimum, though, ideally, it should be raised to €500,000.”
He added: “Both the thresholds at which the tax must be paid and the rate of tax were massively increased by the Government during the financial crisis. In 2009, a child could inherit €542,544 from a parent, and the balance was taxed at 22pc. Now a child can inherit only €225,000 from a parent before the balance is taxed at 33pc.
“Combine these massive decreases of the CAT threshold with rising property prices, together with the higher rate of tax, and you have a tax system that is punitive to the extreme.”