Finance Bill 2019 capital taxes

Oct 21, 2019

In addition to the Budget day announcements Finance Bill 2019 includes amendments to the CAT Dwelling House Exemption and CGT measures to maintain the status quo for a number of reliefs in the event of Brexit.

Capital Acquisition Tax (CAT)

CAT thresholds

As was announced as part of the Minister’s Budget speech, the Group A CAT threshold which applies for gifts or inheritances from a parent to a child has increased by €15,000 to €335,000.  This increase is small, particularly given that the threshold was €542,544 at its highest point in April 2009 and will do little to reduce the tax burden for children inheriting the family home.  The revised threshold applies to gifts or inheritances taken on or after 9 October 2019.

Dwelling House Exemption

One of the conditions to avail of dwelling house exemption, a mechanism to relieve a charge to CAT on the inheritance of certain property, is that the person receiving the benefit doesn’t have a beneficial interest in any other residential property at the date of the inheritance.  Section 63 of the Bill amends the exemption following the High Court decision in the Deane case. The Bill amends the conditions of the relief such that all properties inherited from the same estate are to be considered. A clawback is provided for where a beneficiary subsequently inherits an interest in any other dwelling house from the same disponer.

Amendments to Probate process

Section 62 of the Bill amends section 48 CATCA 2003 and inserts a new section 48A. The Bill provides for changes to the information to be provided to the Revenue Commissioners and the Probate Office in respect of the estate of a deceased person and the method for providing that information. This change will facilitate the collection and transfer of the data between Revenue and the Probate office. The above changes will only come into effect following a ministerial commencement order and the issue of regulations by Revenue

Capital Gains Tax (CGT)

The Bill includes an amendment to ensure that a capital tax group remains in place where there are UK companies in the group in the event of Brexit

The bill also amends section 621 TCA 1997, Depreciatory transactions in group, to seek to restrict the amount of capital losses arising where there are depreciatory transactions.

Stamp duty

The Bill contains provisions to ensure that the 1 percent life assurance levy and the 3 percent non-life levy will continue to apply to policies issued by Gibraltar insurers to Irish policyholders in the event of Brexit.

The Bill also amends the legislation in relation to the bank levy, increasing the rate from 59 percent to 170 percent of the DIRT paid in the 2017 base year, in order to preserve the total revenue of €150m which is derived annually from this levy.

Company acquisitions

The Bill imposes a stamp duty charge on arrangements involving ‘cancellation schemes’ used in the acquisition of a company where there is an agreement to acquire a (target) company and the target company enters into a Court approved scheme of arrangement involving the cancellation of its shares in accordance with the Companies Act 2014. Stamp duty is payable at the rate of 1 percent of the consideration paid to the shareholders for the cancellation of their shares as if the shares were being directly purchased. The stamp duty is payable by the acquirer. This measure came into effect on Budget night