Gifts and Inheritance Tax – Big Changes from 14 June

May 28, 2010

Capital Acquisitions Tax (CAT) is the tax which is levied on gifts and inheritances. The December 2009 Budget announced some major changes to how this tax is administered. These changes come into effect on 14 June next.

Inheritance Tax Changes on 14 June

The main changes are as follows:

  • The annual Pay & File deadline of 31 October, that already applies to Income Tax, will now also extend to CAT on gifts and inheritances. Where a person receives a gift or inheritance between 1 September and 31 August in a given year, they are obliged to file a gift/inheritance tax return (Form IT38) with Revenue, and pay any liability arising, by the following 31 October.
  • The IT38 tax return must be filed online using the Revenue ROS system, except in a very limited range of circumstances, where a new paper form, Form IT38S, can be used.
  • Where a person has received a gift or inheritance since 1 September 2009, their deadline for paying their CAT tax liability and making their Form IT38 tax return is now extended to 31 October 2010 provided they pay & file online on ROS.  The same deadline also applies to gifts and inheritances received between now and 31 August next.
  • Where a person receives a gift or inheritance in the period between 1 September 2009 and 31 August 2010, they must pay the tax and file their return by 31 October 2011.

Revenue have today published a detailed notice explaining the changes.

Why Gerry Ryan “tax bill” story is unfair

May 11, 2010

“A troubled Ryan owed the taxman €300,000” screamed the front page headline in the Sunday Independent at the weekend.  According to the report, the recently-deceased RTE presenter Gerry Ryan was “beset by financial worries in his final days, particularly in relation to an outstanding debt of around €300,000 he had owed to the Revenue Commissioners”.

'A troubled Ryan owed the taxman €300,000' - report

This story troubles me, for a number of reasons.  First of all, Mr. Ryan is dead, and not in a position to defend himself against any allegations in relation to his tax situation.  Had any such allegations been been made while Mr. Ryan was still alive, I have no doubt that he would have robustly defended himself against them.  Perhaps it takes less courage to attack a man when we know that he can’t fight back?  It is sad to note that the Irish custom of not speaking ill of the dead seems to be a thing of the past.

In addition, I was under the impression that all individual’s tax affairs are confidential between themselves and the Revenue Commissioners.  I have no knowledge of how the newspaper obtained and verified its story in relation to Mr. Ryan’s alleged “tax bill”, however the publication of this report,  literally within days of the man’s death is likely to be very distressing for his grieving relatives and family.

Finally, as this story is now in the public domain, it will be interesting to see how RTE and the other Irish mainstream media deal with it as it unfolds and develops.  An increasingly shrill media hubbub usually follows Revenue’s quarterly publication of tax settlement lists. Perjorative terms like “tax dodgers” and “evaders”  are used with abandon and if a particular settlement list includes a celebrity or public figure, they can expect a media circus on their doorstep.

Don’t get me wrong – tax evasion is indeed a serious crime against society, and evaders must be punished severely (as they invariably are).  The Revenue practice of publishing tax settlement lists  is an important deterrent against wilful evasion.  That said,  I cannot help noticing how rarely such media coverage takes into account the fact that many tax settlement cases involve at least some element of extenuating circumstances.

I have worked for many years as an accountant and tax advisor. In this time, I have seen quite a number of cases where people have ended up in serious difficulty with the Revenue Commissioners, by neglecting their tax affairs and obligations.  I have noticed that many of these cases arise from siginificant personal difficulties including business failure, marital or family breakdown, bereavement, depression or addiction problems and indeed basic human error.

As the current recession deepens, and  we read more and more accounts of seemingly “prosperous” people finding themselves in financial and tax difficulties, I sincerely hope that the media will exercise some level of decency and responsibility in reporting their woes.

“I have spread my dreams under your feet, Tread softly because you tread on my dreams.” W.B. Yeats