CGT Retirement Relief
Finance (No. 2) Act 2023 introduced changes to the CGT Retirement Relief regime that were due to become effective 1 January 2025. Under these changes, the age limits would increase from 65 to 69 years and a new maximum limit of €10 million would apply to transfers to children. Following the introduction of these changes concerns were raised by stakeholders regarding the impact this limit would have on the viability of intergenerational transfers of indigenous businesses. In a welcome change, the Bill now removes this cap, replacing it with a clawback period of 12 years in relation to transfers to children in excess of €10m. The increased age limit to 69 has been retained. The child will be liable for any CGT arising on the clawback. Where no disposal is made in the 12 year period, the deferred CGT will be abated on the child making a claim in his/her tax return. A bona fide clause has also been introduced in respect of any claims for relief, deferral or abatement of CGT under this provision.
CGT Angel Investor Relief
This relief was introduced by Finance (No.2) Act 2023 subject to ministerial order and operates to provide a reduced rate of CGT of 16% for direct investments or 18% for investments through partnerships on disposals of certain qualifying investments in qualifying companies by qualifying investors. The Bill increases the lifetime limit on gains from €3m to €10m and includes a number of technical adjustments to the relief, including the introduction of reporting requirements for the qualifying companies. In his speech Minister Chambers stated that this relief would commence shortly.
CAT Agricultural Relief
As announced on Budget day, the Bill now gives effect to the extension of the “active farmer” test to the disponer of the gift or inheritance. Previously the “active farmer” test applied only to the beneficiary. The impact of this change is that for a six year period prior to the transfer of the agricultural property the disponer will be required to meet at least one of the following:
a. Holds a relevant qualification and used the agricultural property for commercial farming or,
b. Spent at least 50% of his/her normal working time using the agricultural property for commercial farming or,
c. Leased the agricultural property to an individual who satisfies a. or b. or,
d. Condition a. or b. was satisfied in respect of part of the agricultural property and condition c. was satisfied on the remaining agricultural property.
Inter-Family Loans
An additional reporting requirement was included in Finance (No. 2) Act 2023 around the filing of returns related to loans between family members, including loans to and from family-owned companies. The Bill makes provision to ensure that reporting cannot be avoided by imposing minimum interest on such loans. With effect from 1 January 2025 interest-free or low-interest loans above €335,000 have to be reported to Revenue.
CAT Thresholds
The Bill provides for the increase to the CAT thresholds as follows:
- Group A from €335,000 to €400,000
- Group B from €32,500 to €40,000
- Group C from €16,250 to €20,000.
These increases were passed by resolution and apply to gifts or inheritances taken on or after 2 October 2024.
Relief for Donations to Sporting Bodies
The Bill proposes to amend Section 847A TCA 1997 which grants tax relief on donations to certain sports bodies for approved projects. Currently, the relief operates to grant the tax relief to self-assessed taxpayers on any such donations and to the sporting bodies in respect of donations from PAYE taxpayers. The changes propose that the donors can now elect to either take the tax relief themselves or surrender it to the sports body.
Additional information
For more specific changes included in the Finance Bill 2024, read the following expert insights:
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