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Credits you can claim against Capital Acquisitions Tax (CAT)

Credit for Capital Gains Tax (CGT)

CGT and CAT may be chargeable on the same property and on the same event. When this occurs, you may be entitled to a credit for CGT paid by the disponer against your CAT liability.

The CAT payable by the beneficiary may be more, or less, than the CGT paid by the disponer. This is because the methods for calculating CAT and CGT are different. The circumstances where you can claim a CGT credit are when:

you receive gifts of property, stocks and shares
a life tenant dies and a further life interest arises. A life tenant is a person who inherits an asset for their lifetime. When the life tenant dies, the life interest passes to another named person, or back to the estate.
a property is appointed by discretionary trustees from a discretionary trust. This applies whether the trust was created by a will or settlement during the life of the settlor.
a trust is broken up early.

The CGT to be credited cannot exceed the amount of CAT payable on the property which is doubly taxed.

Example

John gives a gift of shares and cash to Séamus. The total CAT on the gift is €900 (€500 of this applies to the shares). Only the shares are liable for CGT. The CGT payable on the shares is €600.

The credit for CGT on the shares cannot be greater than the amount of CAT on the shares. Therefore, the credit for CGT paid is €500 (not €600) and this is what Séamus may claim.

The revised CAT to be paid by Séamus is €400 (€900-€500).

Note:

CGT may arise on the disposal of assets during the administration of an estate. Where this is the case, a credit for CGT against CAT is not applicable. This is because the CGT did not arise on the inheritance which is the event giving rise to CAT. The amount of CGT paid may be deducted as a liability to arrive at the taxable value of the inheritance.