Capital Acquisitions Tax Consolidation Act 2003 Schedule 2

Computation of tax

Schedule 2 sets out how capital acquisitions tax (CAT) is computed, including the three group thresholds based on the relationship between the beneficiary and the disponer, the aggregation rules for calculating the tax payable, the rate of tax, and special provisions that treat certain persons as more closely related to the disponer than they actually are.

• Three group thresholds determine the tax-free amount: Group A (€400,000) for children and certain parents; Group B (€40,000) for siblings, nieces, nephews, and lineal ancestors/descendants not in Group A; and Group C (€20,000) for all others who are not a spouse or civil partner of the disponer.
• Tax is calculated by aggregating the current benefit with all previous benefits from the same group threshold taken since 5 December 1991, applying a flat rate of 33% to the amount exceeding the threshold.
• Special rules allow a surviving spouse or civil partner of a deceased beneficiary, certain nephews and nieces ("favourite nephew/niece relief"), foster children, and adopted children to be treated as more closely related to the disponer, potentially qualifying for a more favourable threshold.
• Favourite nephew/niece relief requires the nephew or niece to have worked substantially on a full-time basis (more than 24 hours per week, or more than 15 hours per week in a small family business) for at least five years in the disponer's or a qualifying company's trade, business, or profession, with the benefit consisting of business property or shares in that company.

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