Guide to CAT - Exemption Retirement Benefits
Exemption of payments relating to retirement
Legislation - Section 80, Capital Acquisitions Tax Consolidation Act 2003.
Payments made to an employee out of funds provided by the employer by way of retirement benefit, redundancy payment or pension are exempt from Gift Tax. However, if the employee is a relative of the employer or the employer is a private company and the employee is deemed to control the company within the meaning of section 27 of the Act, the Revenue Commissioners may disallow the exemption to the extent that they consider the payment excessive.
In the event that any benefit is taken by a beneficiary of the employee under a superannuation scheme established solely or mainly for persons employed in a trade or profession, that benefit will be deemed to be taken from the employee and not from the employer.
Exemption in relation to retirement benefits
Legislation - Section 85, Capital Acquisitions Tax Consolidation Act 2003.
Any balance of an approved retirement fund which passes on the death of the disponer or the disponer's spouse or civil partner to a child aged 21 years or over is exempt from Inheritance Tax but is chargeable to Income Tax.
If the child is under 21 years, there is no charge to Income Tax but the benefit is liable to Inheritance Tax.
July 2011