220. Deputy Maeve O'Connell asked the Tánaiste and Minister for Finance if his Department will consider reforming the payment deadline system for inheritance tax. [39605/26]

Capital Acquisitions Tax (CAT) is the tax that applies to gifts and inheritances in Ireland. CAT is payable by the beneficiary of a gift or inheritance.

The date of a gift is normally the date it is received. The date of an inheritance is usually the date of death of the person leaving the inheritance. These dates determine the CAT rates and the Group thresholds that apply.

However, the date by which CAT is payable is determined by reference to the “valuation date” of a gift or inheritance. Additionally, the valuation date is the date on which the market value of the property included in the gift or inheritance must be established for CAT purposes.

Section 30 of the Capital Acquisitions Tax Consolidation Act (CATCA) 2003 contains the rules for determining the valuation date. The valuation date depends on the circumstances of a case and is not a fixed date that applies to all gifts and inheritances. In the case of an inheritance, it is date on which the executors of the will are entitled to retain the property for the benefit of the beneficiary, which is generally the date on which probate or letters of administration are granted. However, in some circumstances the valuation date can be earlier.

Section 46 CATCA 2003, provides that where the valuation date occurs between 1 January and 31 August, CAT is payable by 31 October in the same year, and where it occurs between 1 September and 31 December, CAT is payable by 31 October in the following year. Therefore, in circumstances where the valuation date in relation to property comprised in an inheritance falls on or before 31 August, any CAT that is payable on the inheritance must be paid by 31 October in the same year.

CATCA 2003 makes provision for payment of a CAT liability in instalments in certain circumstances. For example, where a benefit consists of real property, taxpayers have a statutory entitlement to pay the CAT liability by instalments. Monthly instalment payments for up to 5 years may be allowed subject to the payment of interest at an annual rate of 8%. A lower rate of interest applies where the benefit consists of “agricultural property” or “relevant business property”, as defined in CATCA 2003.

In addition, I am advised by Revenue that it may allow payment of CAT by instalments over a longer period in exceptional circumstances where the tax cannot be paid without excessive hardship. In such circumstances, Revenue may allow payment to be postponed for such period and on such terms as appropriate. Revenue will consider each case on its merits, taking into account both the financial circumstances of the beneficiary and the nature of the gift or inheritance involved.

The Deputy should note that the Capital Acquisitions Tax is kept under review by my officials.