CAT - Business Relief and Sundry Exemptions

Question 1

Which assets does Business Relief apply to?

Answer 1

• Sole trader’s business/interest in a partnership
• Unquoted shares in a trading company provided the beneficiary on the valuation date and after taking the gift or inheritance will:

1. Own 25% of the voting rights, Or
2. Control the company with a connected person, Or
3. Own 10% of the nominal value of all the issued shares and worked full time for 5 years up to the date of the benefit.

• Land and buildings and plant and machinery situated in the state and owned by the disponer who is a controlling shareholder with their spouse and used by the company/partnership.

Question 2

What constitutes a “connected person” for Business Relief purposes?

Answer 2

(a) Spouse
(b) The mother/father/children/uncles/aunts
(c) Brothers/sisters/nephew/nieces/grandchildren/great-grandchildren/first cousins and their children
(d) Spouses of (b) and (c)
(e) Grandparents

Question 3

How long must land and building be used by the business to qualify for Business Relief?

Answer 3

To qualify the land and buildings must be used by the company/partnership for at least five years if a gift and two years if an inheritance.

Also it must be transferred on the same day to the same person as shares in the company/partnership by a controlling shareholder.

Question 4

How long must the disponer have owned the business property?

Answer 4

The disponer must have owned the business property for two years if an inheritance or five years if a gift.

Question 5

What are the Clawback conditions for Business Relief?

Answer 5

• If the business is no longer a business unless due to bankruptcy/insolvency.
• Business is sold within six years and not replaced within one year.

Question 6

What are the exemption rules for spouses and civil partners?

Answer 6

Separated Spouses
If spouses are separated the CAT exemption still applies. For CAT the couple just have to be married for the spousal relief to apply.

Divorced Spouses
Disposals between divorced spouses are liable to CAT. GT3 will apply. However, if the assets are being transferred as part of the divorce settlement the spousal relief will apply.

Co-habiting relationship
The CAT exemption will not apply if assets are transferred between co-habiting couples. GT3 will apply.
However, if the assets are transferred by court order on the termination of the co-habiting relationship the exemption will apply.

Question 7

What are the exemption rules for inheritance to parent from child?

Answer 7

• Must be an inheritance taken on the death of the child
• The child must have taken a non-exempt gift/inheritance from either or both parents within five years immediately preceding the date of death of the child.

Question 8

What are the exemption rules for Irish Government Stock?

Answer 8

• The donee/successor is neither domiciled/ordinarily resident in the state at the date of the gift or inheritance
And
• Disponer is neither domiciled/ordinarily resident in the state at the date of the disposition
OR
• Disponer owned the stock for 15 years.

Question 9

What are the exemption rules for a Section 72 policy?

Answer 9

The proceeds from a section 72 policy are exempt from CAT once used to pay the CAT arising on the death of the insured.

Question 10

What are the exemption rules for Objects of National Interest?

Answer 10

Exempt once not disposed of by the beneficiary within six years of the valuation date. The property must be kept in the state and be made available for public viewing.

Question 11

What are the exemption rules for payments to children for support, maintenance and education?

Answer 11

FA 2014 introduced an age limit on the exemption

• Under 18
• 18 to 25 years if in full-time education
• Children (no matter what age) who are permanently incapacitated.

These payments must be made during the lifetime of a disponer.