Business Relief is granted where you inherit or receive a gift of a “relevant business property”. It effectively reduces the taxable value, on which CAT is calculated, by 90%.
Revenue define a relevant business as “a business in any activity, trade, profession or vocation which generates income or profits over time”. Agricultural property which does not qualify for Agricultural may qualify for Business Relief.
The business qualifies as “relevant business property”
The owner making the gift or inheritance must have owned the property for a minimum period
You retain ownership of the property for a minimum period of time after the date of inheritance or gift
Where a business deals mainly in the following, they do not qualify for business relief;
Example of how Business Relief Reduces a CAT Liability
John inherits the family business on the death of his father
The taxable value of the business was €1,000,000
|Taxable Value Before Relief||€1,000,000|
|Less Business Relief (1,000,000@90%)||€900,000|
|Net Taxable Value||€100,000|
Where Business Relief will not be available on some or all of the business property, it may be possible to put in place a Section 72 policy to ensure that the tax liability does not impact significantly on the cash flow of the business. How a Section 72 policy works is explained here.
It is important to get the right advice on how to manage the tax liability on transferring or receiving business assets.
This marketing information has been provided for discussion purposes only. It is not advice, it is provided for general information purposes only and does not fully take into account your financial position, investment needs and objectives, attitude to risk, liquidity needs, capital security needs, capacity for loss, etc. It should therefore not be relied upon to make investment decisions.
The particular tax treatment contained herein is based on Harvest Financial Services Limited’s understanding of current Revenue practice as at February 2019. Please note that the tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should take such independent tax advice as you deem appropriate.
The legislative information contained herein is based on Harvest Financial Services Limited’s understanding of current practice as at February 2019 and may be subject to change in the future.