Inheritance tax and CAT

Saint Sonner

QUERY:

A widow inherits shares from a company that her spouse began after his death which would be tax free?

The widow then a few years later sells these shares. say for €3m. this then would mean they would have to pay CAT on the gain which would be approx €1m? leaving the widow €2m.

If the widow then dies with no one only a distant relative to leave this asset too they then become subject to inheritance tax and would have to pay say 33% on €2m - €667k.

Is this not a double taxation of the same assets? or am i wrong on this?

cnocbui

Welcome to the Irish taxation system. VAT is basically double taxation on money earned on which tax has already been paid.

My brother and I inherited equal shares in a property. We each paid inheritance tax on our shares. He then died 2 years later. He asked me did I want him to leave his share to me, which would have meant me paying inheritance tax again and Revenue getting a double dose of CAT, or leave it to my children. I had just bought a house and wasn't in a financial position to pay the inheritance tax, so I picked the leave it to my children option. Big mistake.

nompere

https://www.boards.ie/discussion/2058335891/inheritance-tax-and-cat

The widow inherits the shares for their value at the time her husband died. That inheritance is free from CAT. (CAT covers both gift tax and inheritance tax.)

If she later sells the shares, then Capital Gains Tax (which is not CAT) is charged on the difference between the sale proceeds and the value when she inherited them. That's not going to be €3 million.

If she stlll holds the proceeds of the sale at the time of her death, then the person who inherits her estate will pay CAT. That's just one charge of CAT after two deaths.

Saint Sonner

Thanks.

But the tax system is Taxing at least part of the money twice. Seems unfair. But maybe as someone said that's the way of it in Ireland

earlyevening

All money is taxed over and over again. It's the transaction that is taxed, not the money itself. Taxes are paid when money changes hands (subject to some exemptions)

Charles Babbage

https://www.boards.ie/discussion/comment/121759641#Comment_121759641

https://www.boards.ie/discussion/comment/121759733#Comment_121759733

Exactly. Taxation comes on people who get money, but of course somebody previously had that money. In many ways a person who gets a gift of money paying 33% with a substantial allowance has less cause for complaint than a person working for that money who might pay 40%.