IT39 - Guide to completing the IT38 return (Pay and File)

Introduction

The Finance Act 2012 amended the Pay and File date for CAT from 30 September to 31 October. Therefore all gifts and inheritances with a valuation date in the 12 month period ending on the previous 31 August will be included in the return to be filed by 31 October 2012. This means where the valuation date arises between 1 January 2012 and 31 August 2012, the Pay & File deadline is 31 October 2012. Where the valuation date arises between 1 September 2012 and 31 December 2012, the Pay & File deadline would be 31 October 2013.

For the year of assessment 2011 the pay and file date was 30 September 2011.

Examples:

  • Valuation date 21 February 2012: File IT 38 and pay tax by 31 October 2012
  • Valuation date 6 November 2012: File IT 38 and pay tax by 31 October 2013

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Requirement to file an IT38 CAT Return

An individual (beneficiary) is required to file an IT38 CAT Return where the total aggregable value of gifts / inheritances received on or after the 5th of December 1991 is in excess of 80% of the relevant tax free group threshold.

Notification to file an IT38 return

Revenue will issue an pdf IT38 (PDF, 187 KB) to individuals who it understands may have a requirement to pay and file a CAT return in a tax year. However, the obligation to pay and file a return rests with the taxpayer whether or not a notification to file is received. The form will be personalised in respect of the individual, i.e. it will include their name, address, PPSN.

If you receive a personalised IT38 return and you do not have a requirement to file a return in respect of the relevant twelve month period:

  • You can contact your Local Revenue Office - to indicate that a return is not due from you for the relevant period.
  • Alternatively, you can indicate this on the return and send the form back to Revenue. There is no need to sign the declaration.

A return may not be required if, for example, the Valuation Date has not arisen in the relevant twelve month period.

Requirement to file electronically on ROS

Where the criteria for use of the "Short Form IT38" below do not apply, e.g. where reliefs/exemptions/credits etc. are claimed, the Gift or Inheritance Tax return must be filed electronically through ROS.

CAT is a complex tax and much of Revenue’s administration of CAT prior to the introduction of e-filing has revolved around computational adjustments. By introducing a requirement to claim reliefs and/or exemptions through ROS, Revenue and practitioners will be able to ensure accurate returns through online rules, as currently applies in other taxheads. The functionality of ROS ensures that the form is simple and quick to complete as only questions particular to the individual taxpayer’s circumstances are presented for answers. As information is entered, the system progressively customises the return screens that have to be completed, thus minimising the number of screens and options presented.

The advantage of filing a return through ROS is that the system will calculate the CAT due based on the information entered on the electronic return. However, in the case of a paper return the filers must compute the liability themselves and enter the relevant figure on the return. Revenue will automatically check the liability based on the information provided in the paper form and where Revenue determines a higher liability, an amended assessment will issue, and payment of the additional CAT will be due by the pay and file deadline.

Short form IT38

The existing paper tax return (Form IT38) is being replaced by a newer, simpler version, which will provide for the filing of a paper return only in the following circumstances:

  • Where no relief/exemption/credit is claimed, apart from the small gift exemption.
  • Where the benefit taken is an absolute interest without conditions or restrictions.
  • Where the property included in the return was taken from only one disponer and is not part of a larger benefit or series of benefits taken by the beneficiary on the same day.

The short IT38 return may also be filed on ROS, and this is the preferred method of filing.

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Benefits of E filing on ROS

There are many benefits to eFiling:

  • Revenue can provide a more efficient, timely and cost effective service to its customers.
  • You can access your own Revenue account from your PC with 24 hour, 365 day access to ROS.
  • There are calculation facilities to assist customers in determining their tax liability as well as built-in electronic acknowledgments of returns and payments.
  • The extended filing date applies for Beneficiaries who both Pay and File Electronically

Faster Processing Time for Returns and Payments

By eliminating mailing, handling, and keying in of returns, there will be faster processing of returns and payments. This coupled with the abolition of certificates of discharge will significantly reduce processing times and compliance costs.

Quicker completion of Returns

In ROS the system progressively customises the return as the filer enters data and selects options. Obviously no such option is available in a paper return. With the electronic return the filer is alerted to certain errors and must correct the return before being able to proceed and the tax due will be calculated automatically. This quicker and easier completion of returns will reduce compliance costs.

Working Off-line

The ROS off-line facility allows the IT38 return to be downloaded onto a computer or office computer network for local use off-line. This means that you can use the off-line system to begin to 'build' the return in advance of filing. In addition, the off-line facility allows you to check the returns and payments on-line with your firm’s approval process and make any necessary corrections before uploading the approved return and transmitting it on-line to Revenue, via ROS.

Access and Permission Rights for Practice Staff

ROS functionality is very flexible and matches most office practices. Within your firm, different people may be involved in different stages of filing a return. When you apply for and retrieve the ROS digital certificate, you become the ROS administrator and you can assign different ROS permissions to anybody working in the firm. You can do this by assigning a ROS subcert to other people within the firm. As the ROS Administrator for your firm, you can permit and enable ROS subcert holders to carry out listed tasks ("file return", "view only", etc). This means that each person to whom you assign a ROS subcert can perform e-filing tasks from his/her own computer.

Records

The material in your ROS Inbox is a permanent record that can be archived by you according to your future needs.

Validation of Key Details

The electronic system will validate certain information automatically, such as the tax reference numbers entered for each party, before the return is filed. It will show an error message where invalid data has been entered allowing you to make the necessary corrections before completing and filing the return.

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How to register for ROS

ROS registration is a simple process but, because of the strict security requirements, the process includes postal correspondence and may take a week or two to complete. Therefore, you are advised to start the process in good time before you plan to use the system.

There are three steps to registering for ROS that culminate in your receipt of a ROS Digital Certificate and access to the ROS system.

Step One – Applying for a ROS Access Number (RAN)

To begin this process, if you are a solicitor or a tax agent, you will need to have your firm’s tax registration number (and the tax type to which the number refers i.e. VAT number, Income Tax number, etc) to hand. Once you have completed the application on the ROS webpage, the system will generate a RAN, which you will receive through the post in the following days.

If you are an individual taxpayer and you receive an IT38 notification to file a return, you will be automatically registered for CAT. You can then apply for your RAN by selecting the Tax Type as CAT and using your PPS No. (Personal Public Service Number) if you intend to file the return yourself.

If you are an individual taxpayer and you need to file a return but you did not receive a notification to file from Revenue, you can contact your Local Revenue Office and request to be registered for CAT. When registered you can then apply for your RAN.

Step Two - Applying for a ROS Digital Certificate

Once you have received your RAN in the post, you can proceed to apply for a ROS Digital Certificate on the system. This will result in the system generating a ROS password, which you will receive through the post in the following days.

Step Three - Downloading the ROS Digital Certificate

The final step allows you to use the password to retrieve and download your ROS Digital Certificate to your computer. You are now registered in ROS and ready to file and pay on line.

Detailed guidance on the ROS registration process can be found at Register for ROS.

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How do I file my CAT return on ROS?

Having registered with Revenue as a ROS customer you can file the gift or inheritance tax return (IT38) by logging onto your ROS account and selecting CAT from the tax heads listed. ROS will then show the return screens for CAT. You must first select the appropriate filing period, then continue to complete the return by selecting from drop-down menus and entering the relevant information. You can use the electronic return for all tax years from 2001.

The information you enter will customise the return as you progress so that you are only presented with the relevant sections. The ROS system will calculate the CAT liability based on the information entered. You can use an off-line version of the IT38 by downloading a return to your own computer (or office network), which you can complete off-line. Once satisfied with the return, you can go on-line in ROS to upload and file the completed return and make a payment to Revenue.

How many copies of the IT38 return should I file?

If you are filing a paper form, please only file one copy of the return. Likewise if you are filing an online IT38, you only file it once.

Is there any guidance available on completing the ROS return?

Yes, as you open each return screen, you will be offered a comprehensive help text which explains how to complete each screen. The help text also provides explanations of the terminology used, together with comprehensive information on issues such as what reliefs, exemptions, and credits are available etc.

Can I file my return online prior to the pay and file deadline?

Yes, you can file your return and pay the tax at any time before the deadline.

How do I pay my tax online?

As a ROS customer, you will be able to pay the tax due through Revenue’s on-line service. This is a simple and effective way of ensuring that the appropriate tax is paid on time and assigned to the correct customer.

Payment through ROS is straightforward. Simply sign-in and select the relevant links and the system will guide you through the process.

  • If you are using a standard ROS digital certificate, you can set up a direct debit - known as A ROS Debit Instruction (RDI), where you can nominate a bank account from which ROS will automatically debit the on-line payments you have authorised. Alternatively you can pay by using a debit card.
  • If you are using an Agent ROS digital certificate you may pay by using a debit card or you can pay by Electronic Funds Transfer (EFT).
  • If you are non - resident and are making a payment from abroad, you can pay by Electronic Funds Transfer (EFT).
  • Electronic Funds Transfer (EFT) Payments should be made to the following account:
    • Account Name: CG's CAT Public Account
    • Bank: Allied Irish Banks, 7/12 Dame Street, Dublin 2
    • IBAN IE80 AIBK 9320 8632 4090 22
    • BIC – AIBKIE2D
  • As soon as the payment is made you must email cateftpayments@revenue.ie with the following details:
    • Customer Name/PPSN
    • Amount of Payment
    • Whether payment is for Gift or Inheritance Tax
    • Period covered by payment.

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Can I file the return and pay the tax later?

Yes, you can file the return without payment, however if you choose this option, you must ensure to pay the tax before the pay and file deadline to avoid interest charges.

Surcharges for late filing

An important element of any fixed Pay and File regime is an appropriate sanction for those who do not comply with the Pay and File deadline. In the case of Income Tax, Corporation Tax and Capital Gains Tax this takes the form of a surcharge for the late filing of a return. The surcharge is based on a percentage increase in the total tax payable for the year of assessment. A similar surcharge provision is being introduced for CAT. This is consistent with the objective of bringing CAT into line with other self-assessment taxes.

The surcharge is based on a percentage increase in the total tax payable for the year of assessment, and is subject to a grading of the surcharge by reference to the length of the delay in filing as well as being subject to an overall cap on the level of the surcharge calculated as follows:

  • A 5% surcharge applies, subject to a maximum of €12,695, where the tax return is delivered within two months of the filing date.
  • A 10% surcharge, up to a maximum of €63,485, will be applied where the tax return is not delivered within two months of the filing date.

Interest also arises for late payments.

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How to complete the CAT return on ROS

What information is required to complete the ROS return?

Firstly, to complete the return on line, you must have a valid PPS Number. (PPSN). You will also need the PPSN of the disponer. PPSNs can be found on any correspondence received either from Revenue or The Department of Social Protection. (DSP).

Where your PPSN has two alpha characters one of which is a "W", it will not be accepted on ROS. If you do not have a valid PPSN or where a "W" is the second alpha character in your PPSN you must apply for a new PPSN from the Department of Social ProtectionExternal link for more information.

ROS CAT screens

Set out below is the information required for the various screens when filing CAT returns on ROS. Remember you may not need to complete all screens, as this will depend on the nature of your benefit, and whether or not you are claiming certain reliefs, exemptions or credits. Also remember that a comprehensive help text is available on each screen that will explain in detail how to complete that section of the return.

Beneficiary and Filer details.

  • Name, address, and PPSN of the beneficiary.
  • Name, address and contact details of the filer, if different from the beneficiary.

You can express a doubt about the interpretation/application of the law in the CAT return by ticking the box. Full details should be set out in the space provided on the ROS return.

Disponer details

  • Name, address, and PPSN of the disponer
  • The relationship of the beneficiary to the disponer – select from the drop down menu
  • Indicate if the benefit is a gift or inheritance
  • Indicate where the property comprised in the benefit is situated
  • Indicate the residence and domicile of the disponer and the beneficiary (if some or all the property is situated abroad).

Nature of the benefit

  • Indicate the disposition under which the benefit arose (will/intestacy/deed etc.).

    Indicate:
  • The date of gift/inheritance-date.
  • The Valuation Date.
  • The date of death.
  • The date of grant of probate or administration.
  • State if the tax is being paid by the disponer (tax free benefit).
  • State if any of the tax is being paid from the proceeds of a qualifying insurance policy.
  • State if the inheritance is being taken on the death of a person other than the disponer.

Particulars of properties

Provide details of all the property comprised in the gift or inheritance. You can select different property types from the drop down menu. As you complete each property type you can claim reliefs and exemptions in respect of that particular property and deduct liabilities charged on that property. You can also apply a Limited interest to the property, and calculate rights of residence, support and maintenance.

Liabilities

Enter the value of liabilities properly payable out of the entire benefit – i.e. not chargeable on a particular asset.

Reliefs and exemptions

Indicate the relief/exemption you are claiming from the list provided on the screen. Details of the reliefs and exemptions available for CAT are contained in the following links -

Reliefs

Exemptions

Calculate Taxable Value

The taxable value will be calculated for you by ROS based on the information you have supplied in your return.

Prior and Current Benefits

Insert the value of any prior benefits taken by the beneficiary. These are aggregable benefits and further information can be found at Aggregation rules for calculation of Capital Acquisitions Tax.

The value of the current benefit will be calculated for you by ROS based on the information you have already supplied on the return.

Credits deductible

Enter the value of credits deductible from the list provided:

Credit for Capital Gains Tax

Credit for prior tax on the same event

Double Taxation

Indicate if you are claiming double taxation credits, and select the appropriate credit type from the list provided. ROS will calculate the credit based on the information you supply in this section of the return.

Calculate Assessment

ROS will calculate the assessment of tax due based on the information you have supplied in your return.

The return can now be saved in the offline version for submission when required. When you wish to file the return, you must log on to ROS, select the file you wish to upload, then click "submit" to file it. You will also be given the opportunity to pay the tax online at this point.

ROS Online version

If you are using the ROS Online version you should select “Finish” which will bring you to your Summary page showing the total net tax payable. You should then click “Submit” and your return will be filed. You will also be given the opportunity to pay the tax online at this point.

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How to file the "short" form IT38

You can file the short form IT38 on ROS or in paper format. However filing on ROS is the preferred method. If you file using the paper form you will have to calculate the tax yourself. If the tax is calculated incorrectly you will be issued with a notice of amended assessment and must pay the balance of tax due on or before the filing date to avoid interest. If you use ROS the tax will be calculated for you.

The short form IT38 may be used only in the following circumstances:

  • Where no relief/exemption/credit is claimed, apart from the small gift exemption
  • Where the benefit taken is an absolute interest without conditions or restrictions
  • Were the property included in the return was taken from only one disponer and is not part of a larger benefit or series of benefits taken by beneficiary on the same day.

What information do I need to complete the short IT38?

Firstly, to complete the return on line, you must have a valid PPS Number. (PPSN). You will also need the PPSN of the disponer. PPSNs can be found on any correspondence received either from Revenue or The Department of Social Protection. (DSP).

Where your PPSN has two alpha characters one of which is a "W", it will not be accepted on ROS. If you do not have a valid PPSN or where a "W" is the second alpha character in your PPSN you must apply for a new PPSN from the Department of Social Protection External link for more information.

The following details are required to file the short form IT38 on ROS

  1. Name, Address and PPSN of the beneficiary.
  2. Name, Address and contact details of the filer – if different from the beneficiary.
  3. Indicate that you wish to file a Short IT 38 return by ticking the box.
  4. Name, Address and PPSN of the disponer.
  5. The relationship of the beneficiary to the disponer - select from the drop down menu.
  6. Indicate if the benefit is a gift or an inheritance.
  7. Select Real Property or Other Property.
  8. Indicate the date of gift/inheritance.
  9. Indicate the Valuation Date.
  10. Indicate the date of death.
  11. If the benefit is a gift select Small Gift Exemption if applicable.
  12. Enter the Taxable value of the Gift / Inheritance. The taxable value is the market value of the benefit less liabilities, costs, expenses and consideration.
  13. Small Gift Exemption – this is prepopulated in the case of a gift if claimed at no.11 above.
  14. Group Threshold, this is prepopulated based on the relationship indicated at no.5 above.
  15. Enter taxable value of prior aggregable benefits within this group threshold.
  16. Click "calculator" to show the tax due on the benefit.
  17. Select Continue.
  18. Expression of Doubt is now visible if you wish to enter details. You can express a doubt about the interpretation/application of the law in the CAT return by ticking the box. Full details should be set out in the space provided on the ROS return.
  19. Additional notes field is now visible if you wish to enter any additional information.
  20. The return can now be saved in the offline version for submission when required. When you wish to file the return, you must log on to ROS, select the file you wish to upload, then click submit to file it. You will also be given the opportunity to pay the tax online at this point.

ROS Online version

If you are using the ROS Online version you should complete steps 1 - 18 above, then select "Finish" which will bring you to your Summary page showing the total net tax payable. You should then click "Submit" and your return will be filed. You will also be given the opportunity to pay the tax online at this point.

How to file the paper version of the short IT38

  • Enter the name, address and PPSN of the beneficiary.
  • Enter the year of assessment.
  • Enter the Filer details (if different from the beneficiary).
  • Enter the name, address and PPSN of the disponer.
  • Indicate if the benefit is a gift or an inheritance.
  • Indicate if the property in the benefit is real property and/or other property.
  • State the date of the gift or inheritance.
  • State the Valuation Date.
  • State the date of the disponer’s death (in the case of an inheritance).
  • Indicate the applicable Group Threshold..
  • Enter the taxable value of the gift or inheritance. The taxable value is the market value of the benefit less liabilities, costs, expenses and consideration.
  • Deduct Small Gift exemption if relevant. The first €3,000 of the taxable value of a gift is exempt from tax. (€1,270 prior to 1 January 2003).The exemption does not apply to an inheritance. The exemption is limited to one gift per disponer in a calendar year. In effect, a beneficiary can take €3,000 from the same disponer in different calendar years and these gifts will be exempt from CAT. A beneficiary can take gifts from several disponers in the same calendar year and the first 3,000 of each of those gifts will be exempt.
  • Enter Net taxable value – taxable value less Small Gift Exemption.
  • Enter relevant threshold.
  • Deduct aggregable benefits within the same group threshold.
  • Enter available threshold for this benefit (Threshold less aggregable benefits).
  • Enter taxable excess (net taxable value less available threshold).
  • Calculate tax on the current benefit - taxable excess multiplied by the relevant rate of tax.
  • Sign the declaration on the return, complete the payslip and enclose your cheque.
  • Paper returns and payments should be sent to:
    Collector General,
    PO Box 354,
    Limerick.

Further information and FAQs on the changes to CAT and Probate

January 2016

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