Capital Acquisitions Tax (CAT) is levied on the recipient of gifts and inheritances and comprises of both Gift Tax and Inheritance Tax. In recent years we have seen that it is firmly in the government’s sights as they reduced the exemption thresholds and increased the rate, something they may well revisit again.
A CAT strategy is a key element of any retirement or succession plan. As we anticipate future CAT increases it means CAT planning should start now while asset values are still low and before any further increases are implemented.
We advise our clients on the CAT implications when:
- Making a will – ensuring the CAT liability is not so onerous as to require the asset to be sold to pay the tax
- Planning business succession – structuring the transfer so that the successor will not incur a large tax liability, and also so that the retiring owner will have access to an adequate income stream to fund their own retirement
- Availing of CAT reliefs
- Applicability of CAT exemptions