Exemptions Gifts and inheritances taken by spouses/surviving spouses are exempt and are not aggregated with other benefits Inheritances taken by a parent from a child, where the child had taken non- exempt benefit from either parent in the previous five years Certain Government securities where the donee or successor is neither domiciled or ordinarily resident in the State at the date of the gift or inheritance, and The disponer is neither domiciled or ordinarily resident in the State at the date of the disposition, or The disponer was the beneficial owner of the securities for fifteen years previously

Exemptions Proceeds of qualifying insurance policies are exempt where the policy is taken out for the purposes of paying CAT. Otherwise, the proceeds are not exempt and are aggregated with other benefits Certain objects of national interest are exempt provided they are not disposed of by the beneficiary within six years of the valuation date. Applies where the property is kept permanently within the State and where there are facilities for public viewing. Gifts or inheritances taken for public or charitable purposes are generally exempt

Exemptions A dwelling house plus grounds of one acre is exempt where the following conditions are met: The beneficiary must have occupied the house continuously, as his/her sole or main residence, for a period of three years prior to the date of the gift/inheritance. An period of occupation will not be considered a period of occupation for the purposes of the exemption if during that period the house was the disponer’s only or main residence. This does not apply if the disponer was depending on the beneficiary due to old age or infirmity. The house must be owned by the disponer for the three year period period to the gift

Exemptions A dwelling house plus grounds of one acre is exempt where the following conditions are met: Where replacement property is the subject of a gift, the period of occupancy of the replaced property by the recipient will only be taken into account where either the replaced property or the dwelling house, which is the subject of the gift, was also owned prior to the date of the gift At the date of the gift or inheritance, the beneficiary must not have an interest in, and must not be beneficially entitled to, any other dwelling house

Exemptions A dwelling house plus grounds of one acre is exempt where the following conditions are met: Where the beneficiary is under the age of 55, her or she must continue to occupy the dwelling house for a period of six years commencing on the date of the gift or inheritance. Clawback of the exemption applies in certain circumstances. Superannuation payments to employees, certain retirement benefits, compensation, redundancy, gambling winnings, prizes, certain support and maintenance payments and certain benefits taken by permanently incapacitated individuals are exempt from CAT.

Agricultural Relief Relief operates by reducing the market value of specified agricultural property in calculating the taxable value of a gift or inheritance taken by a qualifying farmer Agricultural property includes: Agricultural land, pasture or woodland situated in the State or EU, Crops, trees and underwood growing thereon, Houses and other farm buildings on the property, Livestock, bloodstock and farm machinery theron, and The EU single farm payment entitlement.

Agricultural Relief Shares deriving their value from agricultural property do not qualify for agricultural relief. They may qualify for business relief. Relief is only available to a farmer, defined as any individual whose assets are represented mainly by agricultural property. Thus, at least 80% of the gross market value of all property to which the individual is beneficially entitled (after taking the gift or inheritance) must consist of agricultural property. It is not necessary for the beneficiary to actually farm the property

Agricultural Relief No deduction is made for mortgages when calculating the gross value of the property, except in the case of ‘Off-farm’ principle private residences, which is a non-qualifying asset. Borrowings for the purchase, repair or improvement of the PPR are deducted when calculating the gross value in this case. Example John owns a house valued at €360,000 with a mortgage of €280,000. His other assets are a bank deposit of €3,500 and shares worth €10,500. In June 2016, he inherits farmland worth €720,000 plus an old farmhouse and buildings worth €310,000, plus machinery and livestock worth €60,000

Calculation of Agricultural Relief For gifts and inheritances of agricultural property, the relief is calculated by reducing the market value of the property by 90%. Liabilities, costs and expenses payable are proportionally reduced also Consideration paid is also proportionally reduced Example On 1 August 2016, Michael transfers agricultural property with a market value of €400,000 to his daughter Ann, who qualifies as a farmer. The lands are charged with a mortgage of €200,000 and Ann is obliged to pay her brother €100,000 by way of consideration.

Calculation of Agricultural Relief Where a gift/inheritance comprises both agricultural and non- agricultural property any expenses will need to be apportioned. 10% of expenses relating to the agricultural property will be deductible. 100% of expenses relating to the non-agricultural property will be deductible Example Tom transfers the following to his grandson Liam on 25 December 2016:

Calculation of Agricultural Relief Farmland in Tipperary €350,000 Woodland in Kerry €100,000 Farm buildings on above farmland €140,000 Holiday cottage in Donegal €100,000 Farm machinery €30,000 Bloodstock €420,000 Total €1,140,000

Calculation of Agricultural Relief The farmland is mortgaged for €80,000. In consideration for the transfer, Liam has agreed to pay his grandfather an amount of €250,000. Legal and other costs associated with the transfer amount to €25,000 payable out of the gift. Liam has not received any benefits prior to this. Liam’s only other assets are his home worth €140,000 with a mortgage outstanding of €40,000, and a bank deposit account of €5,000

Clawback of Agricultural Relief Where the agricultural property is sold within 6 years of the date of the gift or inheritance and is not replaced within one year by other agricultural property, the relief is clawed back Where only a portion of the sale is reinvested in agricultural property there will be a partial claw back Claw back does not apply to the sale of crops, trees or underwood or where the beneficiary dies before the sale Clawback also arises where the agricultural property ceases to be farmed by a farmer for less than 50% of the individuals working time within 6 years of the date of gift/inheritance. A farmer can be the beneficiary or a lessee.

Clawback of Agricultural Relief Clawback involves a recalculation of the tax as if agricultural relief never applied The retention period is extended to 10 years for development land

Business property relief An individual who fails the farmer test may qualify for business property relief A gift or inheritance of a family business or shares in a family company may qualify for this relief. In order to qualify for the relief, the assets transferred must be relevant business assets.

Business relief – Relevant business assets Property or any asset of an unincorporated business or an interest in a business, located in Ireland or abroad. Recipient must carry on the business for 6 years to avoid clawback Assets transferred separately to the transfer of the business do not qualify

Business relief – Relevant business assets Land, buildings, machinery or plant which was used, wholly or mainly, for the purpose of the business immediately before the gift or inheritance, carried on by a company controlled by the recipient, their spouse or by a partnership in which the recipient was a partner To qualify the disponer must simultaneously transfer shares in the company which qualify as relevant business assets or an interest in a partnership which qualifies as relevant business assets Recipient must use the assets in the business for 6 years to avoid clawback

Business relief – Relevant business assets Unquoted shares or securities of a company carrying on a business provided that the beneficiary will (after taking the gift or inheritance), either: Own more than 25% of the voting rights of the company, or Control the company (own more than 50% along with his her relatives), or Own at least 10% or more of the aggregate nominal value of all the issued shares and securities of the company and have worked fulltime in the company throughout the period of 5 years ending on the date of the gift or inheritance

Business relief – Relevant business assets Quoted shares or securities of a company carrying on a business provided they would have qualified for the relief if it is assumed they were unquoted, were in the beneficial ownership of the disponer immediately prior to the transfer and were unquoted on 23 May 1994, or, if later, the date of commencement of that beneficial ownership.

Business property relief Businesses involved mainly in property or share dealing or in managing investments or currency dealing are excluded from the relief.

Business property relief – Minimum period of ownership To qualify of the business relief, the asset must have been continuously in the beneficial ownership of the disponer, or of the spouse/ civil partner of the disponer, for the following minimum periods: Two years prior to the date of the inheritance, five years prior to the date of a gift A period of ownership by the spouse/ civil partner of the disponer or by a trustee may be included for the two and five year tests The five year test also applies to gifts/inheritances taken from express or discretionary trusts

Business property relief – Minimum period of ownership When qualifying business property has been replaced with other property within the minimum ownership period, that relevant business property will qualify for the relief if the property it replaced would have qualified as relevant business assets Minimum ownership periods extended to 3 and 6 years Assets must be owned for 2 out of 3 years and 5 out of 6 years

Quick succession relief The two year minimum ownership rule is waived in the case of an inheritance where the following conditions are satisfied: The disponer had acquired he property as a result of a gift or inheritance The property acquired would have qualified as relevant business property The property would satisfy all other conditions to be relevant business property other than the two year rule

Clawback If the property ceases to qualifying business property or is sold within 6 years of the valuation date If sold, and replaced within one year, clawback is avoided. Clawback involves a recalculation of the tax as if business relief never applied The retention period is extended to 10 years for development land Clawback does not apply if the claimant dies during retention period

Calculation of business property relief The relief takes the form of a reduction by 90% of the net market value of the business. Example John gifted 100% of the shares in ABC ltd to his daughter Ann on 1 June 2016. The company had been incorporated in March 1996 by John with original share capital valued at €100. John is 60 years old and has worked full-time with the company since incorporation. The shares in staples were valued at €960,000. The company’s net assets at market value on this date were as follows: Factory premises €150,000

Calculation of business property relief Investment property €550,000 Goodwill €100,000 Plant and machinery €50,000 Stock €90,000 Trade debtors €80,000 Trade creditors (€60,000) Total €960,000