Tuesday, 6 July 2010
Dáil Éireann Debate
137. Deputy Richard Bruton asked the Minister for Finance his views on making it compulsory for capital acquisitions tax to be filed on-line; the consideration given to those without Internet or computer access; and if he will make a statement on the matter. [29400/10]
Minister for Finance (Deputy Brian Lenihan): The Deputy will be aware that Finance Act 2010 introduced significant changes to modernise and simplify the probate process and Capital Acquisitions Tax (CAT). One of the key changes is to the filing of CAT returns (Forms IT38). A new simplified paper form has been developed and may be used where the following conditions are met:
I am advised by the Revenue Commissioners that about 75% of all inheritance tax cases are non-taxable. Of the taxable inheritances, it is estimated that the new simplified return can be used in about 25% of cases. Where any other relief/exemption/credit is being claimed, the return must be filed electronically through Revenue’s On-line Service (ROS). Returns through ROS may be made by the taxpayer or by a practitioner (for example, a solicitor or accountant) acting on his or her behalf. Reliefs from CAT can be very significant; for example, agricultural and business property reliefs can reduce the taxable values by 90% and dwelling house relief gives a full exemption.
CAT is also one of the more complex taxes resulting in many calculations and potential adjustments. Online filing and calculation reduces the scope for error and miscalculation. The online form is relatively simple and quick to complete as only questions that are pertinent to the return are presented for answers. As information is entered, the system progressively customises the return screens that have to be completed, thus minimising the number of screens and options presented.
Furthermore, the 2009 Report of the Commission on Taxation recommended that where data on “tax expenditures” are required to facilitate evaluation and cost-benefit analysis, taxpayers availing of the tax reliefs should be required to e-file their tax returns. The opportunity was taken to implement the Commission’s recommendation for CAT as part of the modernisation and simplification changes.
In summary, the CAT modernisation process has provided a much simpler paper system for 25% of cases, and in cases where electronic filing is mandatory, I am advised by the Revenue Commissioners that it would be very unusual for a person claiming the more complex reliefs not to be represented by a practitioner. If an individual taxpayer in the more complex cases is not using a practitioner and has genuine capacity difficulties in relation to online filing, that individual can contact Revenue directly to discuss his or her individual circumstances and will be facilitated as far as possible.
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