PART VI

Capital Acquisitions Tax

Chapter I

Taxation of Assets Passing on Inheritance (Probate Tax)

109. —(1) In this Chapter, except where the context otherwise requires—

“the Act of 1965” means the Succession Act, 1965 ;

“the consumer price index number” means the All Items Consumer Price Index Number for a year as compiled by the Central Statistics Office and expressed on the basis that the consumer price index number at mid-November, 1989, is 100;

“the deceased”, in relation to the disposition referred to in section 110 (1), means the disponer;

“dependent child”, in relation to the deceased, means a child who at the time of the deceased's death—

(a) was living and had not attained the age of 18 years, or

(b) was receiving full-time education or instruction at any university, college, school or other educational establishment and was under the age of 21 years or, if over the age of 21 years, was receiving such full-time education or instruction continuously since before attaining the age of 21 years;

“dependent relative”, in relation to the deceased, has the meaning assigned to it by subsection (9A) (a) (inserted by the Finance Act, 1979 ) of section 25 of the Capital Gains Tax Act, 1975 ;

“the dwelling-house” means—

(a) a dwelling-house, or part of a dwelling-house, which was occupied by the deceased as his only or principal place of residence, at the date of his death,

(b) the curtilage of the dwelling-house which the deceased had for his own use and enjoyment with that dwelling-house up to an area (exclusive of the site of the dwelling-house) of one acre, and

(c) furniture and household effects being the normal contents of the dwelling-house:

Provided that—

(i) in the case of a dwelling-house, part of which was used mainly for the purpose of a trade, business, profession or vocation or was let, this definition shall not apply to the part so used or let, and

(ii) in a case where more than one dwelling-house is included in the estate of the deceased, and more than one such dwelling-house is used equally as a place of residence this definition shall apply only to one dwelling-house so used;

“the estate of the deceased” means the real and personal estate of the deceased as defined by section 10 (4) of the Act of 1965;

“the net market value of the dwelling-house” means the market value of the dwelling-house at the date of death of the deceased or, if less, that market value less the market value at that date of any sum which is charged or secured on the dwelling-house by the will, or other testamentary disposition, of the deceased and which is comprised in the share of an object of the relevant trust in the estate of the deceased, other than the share of a person whose place of normal residence was at that date the dwelling-house and who was on that date a dependent child or dependent relative of the deceased;

“object”, in relation to a relevant trust, means a person entitled to a share in the estate of the deceased (otherwise than as a creditor);

“occupied”, in relation to a dwelling-house or part of a dwelling-house, means having the use thereof, whether actually used or not;

“the Principal Act” means the Capital Acquisitions Tax Act, 1976 ;

“relevant threshold” means £10,000 multiplied by the figure, rounded to the nearest third decimal place, determined by dividing by 108.2 the consumer price index number for the year immediately preceding the year in which the death of the deceased occurred;

“relevant trust” means—

(a) any trust under which, by virtue of the provisions of section 10 (3) of the Act of 1965, the executors of a deceased person hold the estate of the deceased as trustees for the persons by law entitled thereto, or

(b) any trust of which, by virtue of section 110 (3), the President of the High Court is deemed to be a trustee;

“share”, in relation to the estate of the deceased, includes any share or interest, whether arising—

(a) under a will or other testamentary disposition, or

(b) on intestacy, or

(c) as a legal right under section 111 of the Act of 1965, or

(d) as the subject of an order under section 117 (as amended by the Status of Children Act, 1987 ) of the Act of 1965, or

(e) in accordance with the law of another country,

and includes also the right to the entire of the estate of the deceased.

(2) A reference in this Act or in any Act of the Oireachtas passed after the passing of this Act to probate tax shall, unless the contrary intention appears, be construed as a reference to the tax chargeable on the taxable value of a taxable inheritance which is charged to tax by virtue of section 110 .

110. —(1) Where, under or in consequence of any disposition, property becomes subject to a relevant trust on the death of a person dying after the date of the passing of this Act (in this section referred to as “the disponer”), the trust shall be deemed on the date of death of the disponer to become beneficially entitled in possession to an absolute interest in that property and to take an inheritance accordingly as if the trust, and the trustees as such for the time being of the trust, were together a person for the purposes of the Principal Act, and that date shall be the date of the inheritance.

(2) The provisions of subsection (1) shall not prejudice any charge for tax in respect of any inheritance affecting the same property or any part of it taken under the disposition referred to in subsection (1)—

(a) by an object of the relevant trust referred to in subsection (1), or

(b) by a discretionary trust by virtue of section 106 (1) of the Finance Act, 1984 ,

and any such inheritance shall, except for the purposes of subsections (3) and (4) of section 55 of the Principal Act, be deemed to be taken after the inheritance referred to in subsection (1).

(3) Where, under the provisions of section 13 of the Act of 1965, the estate of a deceased person vests on the date of death of the deceased in the President of the High Court, then, for the purpose of subsection (1), the President of the High Court shall be deemed to hold that estate as a trustee in trust for the persons by law entitled thereto, and the estate of the deceased shall be deemed to be property which became subject to that trust on that date.

(4) The provisions of sections 10 and 13 of the Act of 1965, shall, for the purposes of subsection (1), be deemed to apply irrespective of the domicile of the deceased or the locality of the estate of the deceased.

111. —In relation to a charge for tax arising by virtue of section 110 —

(a) the valuation date of the taxable inheritance shall be the date of the inheritance;

(b) a reference in section 16 of the Principal Act (as amended by the Finance Act, 1993) to a company controlled by the successor and the definition in that section of “group of shares” shall be construed as if (for the purpose of that reference) the list of persons contained in subsection (3) of that section and (for the purpose of that definition) the list of persons contained in that definition included the following persons, that is to say, the trustees of the relevant trust, the relatives of the deceased, the nominees of those trustees or of those relatives, and the trustees of a settlement whose objects include the relatives of the deceased;

(c) a person who is a personal representative of the deceased shall be a person primarily accountable for the payment of the tax;

(d) every person entitled for an interest in possession to a share in the estate of the deceased, and every person to whom or for whose benefit any of the property subject to the relevant trust is applied or appointed, shall also be accountable for the payment of the tax and the Principal Act shall have effect, in its application to that charge for tax, as if each of those persons were a person referred to in section 35 (2) of the Principal Act;

(e) where the total taxable value referred to in paragraph (a) of the proviso to section 113 exceeds the relevant threshold, section 36 (2) of the Principal Act (inserted by the Finance Act, 1989 ) shall have effect, in the application of the Principal Act to any such charge for tax as aforesaid, as if—

(i) the reference in that subsection to four months were construed as a reference to nine months, and

(ii) the reference in that subsection to a person primarily accountable for the payment of tax were construed as including a reference to a person primarily accountable by virtue of paragraph (c) of this section;

(f) sections 19, 21, 35 (1), 36 (4) and 40, subsections (1) to (3) of section 41, and section 43 of, and the Second Schedule to, the Principal Act shall not apply;

(g) section 18 of the Principal Act shall have effect, in the application of the Principal Act to any such charge for tax as aforesaid, as if—

(i) liabilities, costs or expenses incurred after the death of the deceased, other than reasonable funeral expenses, were not an allowable deduction,

(ii) any bona fide consideration paid prior to the death of the deceased by an object of the relevant trust, in return for a share in the estate of the deceased, were consideration paid by the relevant trust on the date on which it was paid by the object, and

(iii) where the property which is exempt from such tax is the dwelling-house, or a part thereof, the restriction on the deduction of any liability referred to in subsection (5) (e) of the said section 18 did not apply;

(h) section 60 of the Principal Act shall apply with the modification that, notwithstanding subsection (3) of that section, the Commissioners may refuse to issue the certificate referred to in subsection (1) of that section—

(i) in a case where the tax is being wholly or partly paid by the transfer of securities to the Minister for Finance under the provisions of section 45 of the Principal Act, until such security as they think fit has been given for the completion of the transfer of the securities to the Minister for Finance, or

(ii) in a case where payment of such tax has been postponed under the provisions of section 44 (1) of the Principal Act, or under section 118 , until such tax as has not been so postponed has been paid together with the interest, if any, thereon, or

(iii) in any other case, until the tax has been paid together with the interest, if any, thereon;

(i) section 2 (a) of section 57 of the Principal Act (inserted by the Finance Act, 1978 ) shall not apply and subsection (2) (c) of that section shall be construed as if the reference therein to the donee or successor were a reference to the deceased;

(j) subsection (6) of section 36 of the Principal Act (inserted by the Finance Act, 1989 ) shall have effect, in the application of the Principal Act to any such charge for tax as aforesaid, as if the reference in that subsection to a person primarily accountable for the payment of tax by virtue of section 35 (1) were a reference to a person primarily accountable by virtue of paragraph (c) of this section;

(k) section 55 of the Principal Act shall be construed as if the reference in subsection (4) of that section to the successor were a reference to the person who would be the successor for the purpose of that subsection if this Chapter had not been enacted; and

(l) section 63 of the Principal Act (as amended by the Finance Act, 1989 ) shall have effect, in the application of the Principal Act to any such charge for tax as aforesaid, as if—

(i) £1,000 were substituted for £5,000 in subsection (3) of that section,

(ii) £400 were substituted for £2,000 in subsection (1) (a) of that section,

(iii) £200 were substituted for £1,000 in subsections (2) and (7) of that section, and

(iv) £5 were substituted for £25 in subsection (1) (b) of that section.

112. —The following property shall be exempt from tax (and shall not be taken into account in computing tax) in relation to a charge for tax arising by virtue of section 110 —

(a) any right to receive any benefit—

(i) under—

(A) any sponsored superannuation scheme within the meaning of section 235 (9) of the Income Tax Act, 1967 , but excluding any scheme or arrangement which relates to matters other than service in particular offices or employments, or

(B) a trust scheme or part of a trust scheme approved under the said section 235 or section 235A of the said Act;

or

(ii) under any scheme for the provision of superannuation benefits on retirement established by or under any enactment; or

(iii) under a contract approved by the Commissioners for the purposes of granting relief for the purposes of section 236 of the Income Tax Act, 1967 , in respect of the premiums payable in respect thereof;

(b) property given by the will of the deceased for public or charitable purposes to the extent that the Commissioners are satisfied that it has been, or will be, applied to purposes which, in accordance with the law of the State, are public or charitable;

(c) the dwelling-house, in a case where the deceased is survived by his spouse;

(d) in the case where the deceased is not survived by his spouse, the dwelling-house comprised in an inheritance which, on the date of death of the deceased, is taken under the will or other testamentary disposition or under the intestacy of the deceased, by a person who was on that date a dependent child of the deceased or a dependent relative of the deceased and whose place of normal residence was at that date the dwelling-house:

Provided that—

(i) the total income from all sources of that dependent child or that dependent relative, for income tax purposes, in the year of assessment ending on the 5th day of April next before that date, did not exceed the “specified amount” referred to in subsection (1A) of section 142 of the Income Tax Act, 1967 ,

(ii) the amount of the exemption shall (subject, with any necessary modifications, to the provisions of section 18 (4) (a) of the Principal Act in the case of a limited interest, and to the provisions of section 20 of that Act in the case of a contingency) be the whole or, as the case may be, the appropriate part (within the meaning of section 5 (5) of the Principal Act) of the net market value of the dwelling-house, and

(iii) the amount of the exemption shall not be reduced by virtue of the provisions of section 20 of the Principal Act where an entitlement ceasing within the meaning of that section ceases because of an enlargement of that entitlement.

113. —The tax chargeable on the taxable value of a taxable inheritance which is charged to tax by virtue of section 110 shall be computed at the rate of two per cent. of such taxable value:

Provided that—

(a) where the total taxable value on which tax is chargeable by virtue of section 110 on the death of the deceased does not exceed the relevant threshold, that tax shall be nil, and

(b) where that total taxable value exceeds the relevant threshold, that tax shall not exceed the amount by which that total taxable value exceeds the relevant threshold.

114. —Where by virtue of section 110 tax is payable in respect of any property on the death of one party to a marriage, then a charge to tax shall not arise by virtue of that section in respect of that property, or in respect of any property representing that property, on the death of the other party to the marriage within—

(a) one year after the death of the first-mentioned party, or

(b) 5 years after the death of the first-mentioned party, if that other party is survived by a dependent child of that other party.

115. —In relation to a charge for tax arising by virtue of section 110 , property which, at the date of death of the deceased, represents any share in the estate of the deceased, shall, save to the extent that it is exempt from or not chargeable to such tax, bear its due proportion of such tax, and any dispute as to the proportion of tax to be borne by any such property, or by property representing any such property, may be determined upon application by any person interested in manner directed by rules of court, either by the High Court, or, where the amount in dispute is less than £15,000, by the Circuit Court in whose circuit the person recovering the same resides, or the property in respect of which the tax is paid is situate.

116. —(1) The person applying for probate or letters of administration of the estate of the deceased shall—

(a) notwithstanding the provisions of section 36 (inserted by the Finance Act, 1989 ) or section 39 of the Principal Act, make, on a form provided by the Commissioners, an assessment of the tax arising on the death of the deceased by virtue of section 110 , and that assessment shall include the interest, if any, payable on the tax in accordance with paragraph (b) of section 117 , and shall be of such amount as to the best of the said person's knowledge, information and belief, ought to be charged, levied and paid, and the form on which the assessment is made shall accompany the Inland Revenue Affidavit which is required to be delivered to the Commissioners, and

(b) on delivering the Inland Revenue Affidavit to the Commissioners, duly pay the amount of such tax and interest,

and the Inland Revenue Affidavit and the form on which the assessment is made shall together, for the purpose of section 36 (2) of the Principal Act, be deemed, in relation to the tax arising by virtue of section 110 , to be a return delivered by a person primarily accountable.

(2) The provisions of section 36 (3) (b) of the Principal Act (inserted by the Finance Act, 1989 ) shall, with any necessary modifications, apply to any payment required by virtue of this section.

117. —In relation to a charge for tax arising by virtue of section 110 —

(a) the tax shall be due and payable on the valuation date;

(b) simple interest to the date of payment of the tax shall, from the first day after the expiration of the period of 9 months commencing on the valuation date, be payable upon the tax at the rate of one and one-quarter per cent. per month or part of a month, without deduction of Income Tax, and shall be chargeable and recoverable in the same manner as if it were part of the tax;

(c) notwithstanding the provisions of paragraph (a), where, during the said period of 9 months, a payment is made on foot of the tax, the tax due at the time of the payment shall be discounted by an amount appropriate to the payment, such discount being calculated on tax at a rate per cent. equal to one and one-quarter per cent. multiplied by the number of months in the period from the date of payment to the date of the expiration of the said period of 9 months, and for this purpose a month shall include a part of a month:

Provided that insofar as the payment is repaid by the Commissioners in accordance with the provisions of section 46 of the Principal Act, no discount shall be appropriate to the payment;

(d) notwithstanding the provisions of paragraph (b), the interest payable upon the tax shall not exceed the amount of the tax.

118. —Where the Commissioners are satisfied that there are insufficient liquid assets comprised in the estate of the deceased to meet any tax arising by virtue of section 110 , they may allow payment to be postponed for such period, to such extent and on such terms as they think fit.

119. —In relation to a charge for tax arising by virtue of section 110 , section 85 (2) (b) (iii) of the Finance Act, 1989 , and section 133 (2) (b) (iii) shall not apply.