Disponer and disposition

Capital Acquisitions Tax (CAT) applies to gratuitous benefits, for example, a gift (s 4) or an inheritance (s 9).

The person who provides the property is the disponer, and the disposition is the method by which the property passes. Where property passes by will, the disponer is the testator. Where property passes on intestacy (no will), the disponer is the deceased.

The term disposition is very widely defined to include not only a will or intestacy, but any method (including, for example, any trust covenant, agreement or arrangement) by which property can pass.

The date of the disposition is the date of death of the disponer in the case of property passing by will or intestacy, and in other cases it is the date on which the disponer provided the property (or bound himself to provide it).

Taxable benefits

To be chargeable, a gift (s 6) or inheritance (s 11) must be taxable.

A gift is taxable if:

(a) the disponer was Republic of Ireland (ROI) resident or ordinarily resident at the date of the disposition, or at the date of the gift, or

(b) the donee was ROI resident or ordinarily resident at the date of the gift.

Otherwise, only the part or proportion of the property situate in the ROI at the date of the gift is taxable.

An inheritance is taxable if:

(a) the disponer was ROI resident or ordinarily resident at the date of the disposition, i.e., the date of death, or

(b) the successor was ROI resident or ordinarily resident at the date of the inheritance.

Otherwise, only the part or proportion of the property situate in the ROI at the date of the gift is taxable.

A non-Irish domiciled person can only be regarded as ROI resident or ordinarily resident for CAT purposes if he has been continuously ROI resident for the five year period ending on the date of the gift or inheritance.

Taxable value

A property’s taxable value (s 28) is computed as:

Market value

less liabilities, costs and expenses payable out of the gift or inheritance

= incumbrance free value

less consideration paid by acquirer in money or money’s worth

= taxable value

Tax is charged on the valuation date. In the case of a gift, this is the date of the gift. In the case of an inheritance, it is generally the date of death, or the earliest date on which his personal representatives can retain the inherited property for the beneficiary (s 30).