Finance Act 2010, Changes to CAT and Probate: Frequently Asked Questions
What are the changes to CAT and the administration of Probate being introduced by the 2010 Finance Act?
Gift tax is payable on certain gifts made during the lifetime of the donor. The person making the gift is called the donor or disponer and the person receiving the gift is called the donee. A gift is taken when a donee becomes beneficially entitled in possession to some property and does not give full consideration for it.
The 2010 Finance Act is introducing significant changes to the Capital Acquisitions Tax Consolidation Act 2003, as amended, to provide for –
- Removal of the requirement for Revenue certification of the Inland Revenue Affidavit (CA24) before issue of Probate by the Courts Service (Probate Office).
- Introduction of a pay and file regime for Gift Tax and Inheritance Tax.
- The introduction of a surcharge for the late filing of a CAT return.
- Abolition of the status of CAT as a charge on property that has been the subject of a gift or inheritance in the previous 12 years.
- Abolition of secondary accountability. Forms CA11, CA44, IT10, will no longer be issued by Revenue.
- Requirement to appoint an Irish-resident “agent” who will be responsible for pay and file procedures where beneficiaries are non-resident and do not pay and file.
- A requirement to electronically file where reliefs are being claimed.
When are these changes coming into effect?
The abolition of the status of CAT as a charge on property, the abolition of secondary accountability, and a revised clearance threshold of €50,000 for joint accounts, all came into effect from the date of the passing of the Act. All other changes will come into effect on a date to be decided by the Revenue Commissioners. It is envisioned that this will be mid June 2010.
The Inland Revenue Affidavit will continue to be sent to Revenue for certification until mid June. Where the beneficiary is not resident, the personal representative or where the personal representative is also non-resident, the solicitor, is assessable and chargeable where the beneficiary does not file a tax return and make a payment. When does this provision take effect from?
In the situation where the personal representative is resident, the provision has effect from the enactment of the Finance Bill 2010. Where the personal representative is also non-resident and a solicitor is appointed under section 48 (10), the provision has effect from a date to be specified by the Revenue Commissioners expected to be mid June 2010.
What are the changes to the administration of Probate being introduced by the 2010 Finance Act?
From mid June you will no longer need to present an Inland Revenue Affidavit to the Revenue Commissioners for certification prior to your application for Probate to the Courts Service. Instead the Inland Revenue Affidavit will be submitted in duplicate directly to the Probate Office together with all other necessary documentation for the Grant of Representation.
If a corrective affidavit is needed where is it filed?
The corrective affidavit (form CA26) should be sent in duplicate directly to the Probate Office. Revenue will be provided with a copy by the Probate Office.
What is the procedure for De Bonis Non Grants?
Form A3C (change to personal representative) should also be sent in duplicate directly to the Probate Office together with all other appropriate documentation.
What is the position with personal applications for Probate?
The majority of persons instruct a Solicitor to extract Probate. In some instances it is possible to apply in person through the Personal Applicants Section of the Probate Office or one of the District Probate Registries for Probate. Under this new legislation, where there is a non-resident beneficiary of an estate with a potential for tax liability and all of the proposed legal personal representatives of an estate are also non-resident, a Solicitor must be appointed to act in connection with the administration of the estate.
What will be the status of solicitors already acting in estates with non-resident beneficiaries and personal representatives? Will Revenue be treating them as agents under the new rules?
The new provisions apply in respect of applications for probate following the commencement of the Finance Act 2010 changes. Probates issued prior to this date are unaffected.
Will any clearance certificates be issued once the Finance Bill 2010 has been enacted?
In general, clearance certificates will not be issued by Revenue once the Finance Bill 2010 is enacted. An exception applies in the case of applications to the Property Registration Authority for adverse possession.
Can applications still be made for Letters of Clearance Form IT8 and Form IT10?
Form IT8 will still be applied for where the amount lodged or deposited in joint names exceeds €50,000. Form IT10 will no longer be issued.
I have a number of clients who are in the process of purchasing a property and the purchasers are seeking a certificate of discharge. The requirement for the certificate of discharge is included in the contract. What is the position?
Once the Finance Bill 2010 is enacted, there is no need for a certificate of discharge and Revenue will no longer issue certificates of discharge. The inclusion of such a requirement in the contract is superfluous as it is no longer required or available.
I wish to claim a relief as part of making my gift or inheritance tax return. How do I meet the legal requirement to electronically file my return?
You can electronically file by registering with Revenue’s Online Service (ROS).
What is Revenue On-line Services (ROS)?
ROS is an internet based system that enables Revenue customers and their agents to conduct their business electronically with Revenue at a time and place of their choosing. The main features of ROS include facilities to:
- File returns and make payments.
- Obtain online details of personal/clients Revenue accounts.
- Calculate tax liability.
- Claim repayments.
How do I register for ROS?
ROS has a simple three-step registration process, at the end of which a Digital Certificate will be issued. The Digital Certificate enables the customer to access ROS and utilise its full range of services. To register select the Revenue Online Service link from the Revenue homepage. From the ROS homepage click “How to become a ROS customer” and simply follow the instructions. The three steps to becoming a ROS customer are:
- Step 1: Apply for a RAN (ROS Access Number) which is posted to you.
- Step 2: Input the RAN and await the receipt of a system password which is also posted to you.
- Step 3: Enter the password to retrieve your digital certificate.
Is there any restriction on who can register as an agent for the purposes of filing a CAT return?
There is no restriction. Anyone can register to use ROS.
Who should I contact with any problems encountered when filing a ROS Return?
The ROS Helpdesk can be contacted at lo-call 1890 201 106.
I am a solicitor or individual taxpayer and wish to file a gift or inheritance tax return (IT38) online. How do I do this?
Having registered with Revenue as a ROS customer (see question 14) you file the gift or inheritance tax return (IT38) by logging onto your ROS account and selecting CAT from the tax heads listed. ROS will bring up the return screens for CAT. You complete the return by selecting from drop-down menus and entering the relevant information. 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. In practice, most tax returns are prepared in the off-line environment and only uploaded to ROS when they are ready to be submitted to Revenue.
I am a solicitor or individual taxpayer, how do I pay on-line in ROS?
Payment through ROS is straightforward. Simply sign-in and select the relevant links and the system will guide you through the process. You can make the payment by laser or by RDI. When you sign up for ROS you can set up a direct debit with ROS (known as ROS Debit Instruction (RDI)) where you can nominate a bank account from which ROS will automatically debit the on-line payments you have authorised.
I am an agent, how do I file a return on-line?
You cannot complete the return on-line using an “agent” ROS certificate but instead should use the off-line version of the IT38 to download a return to your own computer (or office network), which you can complete. Once satisfied with the return, you can file the return by logging onto your ROS account to upload and file the completed return and make a payment to Revenue.
I am an agent, how do I pay on-line in ROS?
Payment through ROS is straightforward. Simply sign-in and select the relevant links and the system will guide you through the process. You can make the payment by laser card only.
I am a taxpayer, can I file my own return directly with Revenue?
Yes. A taxpayer can file his or her own tax return. However, where the taxpayer wishes to file electronically, or has a requirement to file electronically, through ROS, he or she will need a digital certificate. However, Revenue is aware that, in most cases, the practitioner acting for the estate generally files the tax returns for the beneficiaries and does not expect to see a substantial change in this regard.
Can I file a return without payment?
Yes. However it is important to make a payment of the tax by the due date to avoid interest charges so we recommend filing of the return and payment of the tax at the same time as an efficient and sure way of meeting both obligations to file and pay the tax by the due date. Payment through ROS also ensures that the payment is assigned to the correct case and period. If payment is being made after the return has been filed you can pay separately by going back into ROS or through the post by cheque.
When I push the button to pay and submit, is there a record of all the fields I’ve completed?
Yes. A copy of all the information that you have filed is available through your ROS in-box after the return is filed.
Will a notice of assessment issue automatically like in Income Tax?
CAT is a fully self-assessed tax. By completing your return on line, you self-assess and a notice of assessment will not issue. The tax is automatically calculated for you based on the information you provide. On receipt of the ROS return, Revenue will issue an acknowledgement. If the return is filed late, a surcharge will be due and an amended assessment will be made by Revenue to include the surcharge. In such cases, a notice of amended assessment will issue from Revenue. Where a paper return (IT38) is filed and if Revenue is satisfied that, based on the data in the return, the tax is correctly computed an acknowledgement will issue. However, if Revenue disagrees with the taxpayer’s self-assessment or if a surcharge arises, Revenue will make an amended assessment and a notice of amended assessment will issue.
I am not claiming any reliefs. Can I file my return electronically rather than by paper copy if I wish?
E-filing can be used to file all returns regardless of whether a relief has been claimed. This is the preferred method for filing returns as it eliminates computational errors and ensures that all relevant data is returned. However you can if you wish still make a paper return.
I have received an IT38 from Revenue but do not have a requirement to file this tax year. What do I do?
As a service to customers, Revenue will issue a notice incorporating a Form IT38 to individuals who it understands may have a requirement to pay and file a CAT return. Given the fact that that the valuation date in relation to inheritances is not always easily determinable, Revenue accepts that there may be no liability for the year to which the IT38 relates. Where an individual has received such a form, the individual or a practitioner acting for him/her can advise Revenue that a return is not due. This can be done by contacting your local tax office or by ticking the relevant box on the paper form, and submitting it to Revenue. There is no need to sign the form and the submission of the notification will not be regarded as a submission of a return. The requirement to pay and file a CAT return for a year in which there is a valuation date is unaffected by this procedure.
What should I do where I have received a gift or an inheritance, and have not received a Form IT38 to complete?
You should file a return as required under Sec.46 CATCA 2003.
What happens if I file late?
If a return is filed late, interest and a surcharge will apply. You may also be liable to penalties.
What is the surcharge?
The surcharge is based on a percentage increase in the total tax payable for the year for which the return is late, and is subject to a grading by reference to the length of the delay in filing as well as being subject to an overall cap, 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 (e.g., for the year of assessment 2010, any date between 1 November 2010 and 31 December 2010 inclusive). 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.
If secondary liability and the 12 year charge only remain for cases where Revenue have issued proceedings (after the new Act) how will practitioners be able to confirm if proceedings were issued? Are there any cases in practice where proceedings have issued?
It should be clear to practitioners whether or not proceeding have been commenced. A letter from Revenue indicating that proceedings are being considered is not an indication that proceedings have commenced. Revenue confirms that there are no active cases where proceedings were issued.
As an agent appointed under Section 48(10), what is the position where a beneficiary provides incorrect information regarding the receipt of prior gifts and inheritances and additional tax is now due?
Revenue will not pursue the agent for liability in this situation as a result of the beneficiary providing incorrect information to the agent, provided the agent has made reasonable enquiries on the matter and has acted in good faith.
As an agent appointed under Section 48(10), what is the position where the liability of a beneficiary is affected by the value of non-Irish assets which were not disclosed by the beneficiary to the agent and over which the agent did not have any control?
Where a liability to CAT arises in respect of assets that were not under the control of an agent and the assets were not reported to the agent following reasonable enquiries by the agent acting in good faith, Revenue will only pursue the agent directly for the outstanding tax to the extent of the assets remaining under the control of the agent.
What is a PPS number and where do I get it?
This is an individual’s Personal Public Service Number, which is issued by the Department of Social and Family Affairs. Please note that PPS numbers containing 2 alphas of which the second alpha is a “w” should not be used. In this case, a new number should be sought from the Department of Social Protection.
How will any outstanding Probate Tax issues be dealt with?
There is no change to the treatment of outstanding Probate Tax issues.
How should Inland Revenue Affidavits (Forms CA24) be dealt with for cases where the Disponer died prior to 05/12/2001?
There will be no change to the Inland Revenue Affidavit procedure for cases with a date of death prior to 05/12/2001 and the current form should continue to be used.
As a resident personal representative under Section 45AA of the CAT Act or a solicitor under Section 48 (10) of the CAT Act what steps can I take to ensure I am not personally liable to the inheritance tax of a non-resident beneficiary?
As a result of discussions between the Law Society and Revenue, it is accepted that the resident personal representative or solicitor under Section 48 (10) may write to Revenue [*]indicating that he or she is intending to distribute the assets taken by a non-resident beneficiary from the estate of the deceased within one calendar month, where that personal representative or solicitor is satisfied that any relevant pay and file obligations have been met.
If Revenue indicates within the time frame of one calendar month that it is considering auditing the return or lack of return by that beneficiary, the resident personal representative or the solicitor under Section 48 (10) should retain control of the assets relating to that beneficiary’s benefit (in so far as he or she has control) until such time as either Revenue confirm in writing that there will be no audit or the audit, including any appeal process, is completed and any taxes which are assessable on either the resident personal representative or the solicitor under Section 48 (10) pursuant to Section 45AA of the CAT Act are paid to the satisfaction of Revenue.
If Revenue fails to respond within the timeframe of one calendar month advising that the file may be audited, Revenue are not precluded from carrying out an audit within the usual statutory time limits against the non-resident beneficiary. However where the non-resident beneficiary is selected for audit, the non-resident beneficiary will be responsible for all aspects of the audit process under the Audit Code of Practice for Revenue Auditors without prejudice to the Revenue’s rights, if any, to information as prescribed by law. In the event of an additional liability being identified where the resident personal representative or the solicitor under Section 48 (10) acted honestly and in good faith and did not deliberately fail to comply with his or her obligations, then Revenue will only seek to enforce liability on the resident personal representative or the solicitor under Section 48 (10) to the extent of any assets remaining under his or her control. Any excess liability will be sought by Revenue directly from the non-resident beneficiary and liability for the excess liability will not be enforced against the resident personal representative or the solicitor under Section 48 (10).
* The letter should be sent to Dublin City Centre District, Revenue Commissioners, 9/15 Upper O’Connell street, Dublin 2
When does the increased threshold relating to clearance of joint accounts apply from?
The increased threshold (from €31,750 to €50,000) applies to persons dying on or after 21 February 2003, i.e. the date of the passing of the Capital Acquisitions Tax Consolidation Act 2003. However, on an administrative basis, Revenue will treat the increased threshold as applying to persons dying on or after 26 January 2001.
When is a Form IT8 required in relation to joint deposit accounts in financial institutions?
A. Form IT8 is required where the sum of money on deposit in the name of the deceased and any other person exceeds €50,000. The following examples illustrate the point:
- Joint bank account in the names of John and Joan containing €30,000. John dies – IT8 is not required.
- 2 joint bank accounts in the names of John and Joan containing €30,000 in each account. John dies – IT8 is required. The total on deposit in which John and Joan have an interest is €60,000.
- Joint bank account in the names of John and Joan containing €30,000 and joint bank account in the name of John and Jack also containing €30,000. John dies – IT8 is not required.
- Joint bank account in the names of John and Joan containing €30,000 and joint bank account in the name of John, Joan and Jack and also containing €30,000. John dies – IT8 required. John and Joan have an interest in joint deposit accounts containing €60,000
- Joint bank account in the names of John, Joan and Jack containing €60,000. John dies – IT8 is required. John, Joan and Jack all have an interest in a bank account containing €60,000.
- Joint bank account in the names of John and Joan, who are married to each other, containing €60,000. John dies – IT8 is not required. (The requirement for an IT8 does not apply in the case of a joint account in the names of a married couple.)
The Inland Revenue Affidavit, at page 13 question 6, asks about payments under the Nursing Home Support Scheme. What is the purpose of this question?
The purpose of the question is to prompt the personal representative that there may be a liability under this scheme and to ensure that the liability is reflected in the application for a Grant of Representation. Any liability must be paid to Revenue. The section 16 manual gives more information in relation to Revenue’s role as collection agent for the HSE.
When is the residence test to be carried out for non-resident beneficiaries or personal representatives?
The test for whether a person is resident or not on a particular date, e.g. a date of death, should be carried out for the tax year in which the date falls.
Does the Form Q7 (valuation of private company shares) have to be filed with the CAT return?
There are no changes to the forms and procedure for cases with a date of death prior to 5th December 2001, but for later deaths Form Q7 is no longer be required when the CAT return is filed.
How many copies of the IT38 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.
Do I need to register my client for CAT?
If a taxpayer is not registered within Revenue’s systems you must register them for CAT by contacting the taxpayer’s Revenue office. If the taxpayer is already registered for any tax and you intend on filing their CAT return (IT38) online through ROS then there is no need to register , as the case will be auto registered for CAT when you upload the IT38.
How do I complete the new Inland Revenue Affidavit (CA24)?
The CA24 should be completed in duplicate, preferably using blue pen. If you make an error or do not need to enter any information please do not strike though the boxes.
CA25 (Guide to completing the Inland Revenue Affidavit)
How do I order the new CA24 and IT38S?
The new forms are not available online instead to order call our 24-hour telephone number 1890 30 67 06 or 00353 1 70 23 050 for callers from outside the Republic of Ireland and leave your details and the number of forms you require. Alternatively, you can e-mail your name, full postal address and the number of forms you require to custform@revenue.ie For cases with a date of death prior to 5th December 2001 the forms are availabe to download from the CAT Forms section of the site.
Will I receive a receipt for a CAT payment?
Receipts are no longer being issued for CAT payments. Instead taxpayers may view their payment details by requesting a statement of account or online through ROS.