"Childless couples are being discriminated against when it comes to CAT"

Is it cruel or unacceptable to say that the relationship between parent and child and, uncle and nephew etc. (for a childless couple) is unlikely to be the same?
 
planck said:
Just like your parents are going to pass some wealth to you, possibly tax free, why should a non-parent not be allowed give a gift or leave an inheritance to someone of their choice, with the same tax consequences ?
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Neither should happen. Both should be taxed equally at the appropriate rate with no allowances.
 
T McGibney said:
I do. And especially when I'm not buying something because I can no longer obtain it as easily as I once could.
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I do to. I find it unacceptable that the shop owner is paying a marginal tax rate of over 50% on money they earn when other people are paying nothing on unearned inherited wealth.
It would be great if much lower taxes were levied on both but as long as the State keeps wasting so much money we have to pay high taxes. For me those taxes should not fall so heavily on work and so lightly on wealth, particularly inherited wealth.
 
An edge case of the current system that I'm familiar with from the eye of a receiver:

A friend's father died young and when their grandparents on that side of the family later passed, they received the portion of the grandparents estate that would have gone to their father. This triggered a Group B taxable event for them that would have been untaxed if it was two Group A inheritances from grandparent to parent to child.
 
T McGibney said:
I do. And especially when I'm not buying something because I can no longer obtain it as easily as I once could.

Because these days it's the common denominator in a lot of premature closures of shops and other businesses.
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Okay, I'll bite. The short version of my response could be summed up as "seriously?!".

The longer version is:

The vast majority of premature closures of businesses are due to the business failing, rather than it being so profitable that the owner throws their toys out of the pram over having to pay high marginal income tax rates.

That’s why it's a big claim to make, without a shred of evidence, that high marginal personal income tax is “the” common denominator in “a lot” of premature closures.

Any owner making enough profit to hit the top personal rate can incorporate, pay 12.5% corporation tax, and control how much personal income they take — and when (and benefit from very generous pension options).

Common sense and fundamentals of business valuation argue that a profitable business will normally have a positive value and can either be sold, or a willing successor found, rather than having to close because the business owner dislikes their marginal income tax rate.
 
torblednam said:
The vast majority of premature closures of businesses are due to the business failing
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That's a total red herring as far as my comment is concerned.

I'm in my 50s and I see around me people of my age and younger opting out and retiring from retail or other businesses that they (and in some cases their parents and grandparents) painstakingly built up over many years.

That's not a problem in itself - the problem is the fact that these days the business almost invariably dies as soon as they retire early. In precious few cases is it possible for the retiring owners to give away the business let alone sell it.

Nobody wants to take on the risk and hassle of running an increasingly complex business when the returns from all that will be taxed so harshly on all fronts.
 
torblednam said:
The vast majority of premature closures of businesses are due to the business failing, rather than it being so profitable that the owner throws their toys out of the pram over having to pay high marginal income tax rates.
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Mom’n’pop firms in Ireland tend to produce niche goods or services for domestic customers. They are the parts of the economy that multinationals wouldn’t bother with due to slim pickings on offer.

These businesses are in general not very productive and therefore generate low profits and don’t pay their workers very high wages. Most of them don’t invest very much nor seek to build market share domestically never mind export.

When it comes to succession they are simply not a very appealing prospect for a third-party buyer. Often the only person willing to take over is a child with the business transferred largely CAT-free.
 
T McGibney said:
In precious few cases is it possible for the retiring owners to give away the business let alone sell it.
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Then the CAT won't impact their children or nephews or nieces.

One of the arguments is that we should raise more in capital taxes, so that we can reduce taxes on income which should help a little to keep people in business.

But retirement and businesses closing are perfectly natural parts of the business cycle and life cycle.
 
T McGibney said:
In precious few cases is it possible for the retiring owners to give away the business let alone sell it.
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It’s more likely that the business runs on low margins and the sweat of the owner(s) and is simply not an attractive prospect for a third party.

My friend’s father turned 65 a few years ago and wanted to sell his used car business as none of his children wanted to take over. He couldn’t find a buyer as the only assets were about 20 cars and his good standing with customers. The latter wouldn’t transfer to a new owner. The value of the business was literally zero without him. Such tales are common.

Tax treatment doesn’t help but it’s not the main factor.
 
This entire discussion is ridiculous. Donors- alive or dead- don't pay CAT, the donees might depending on their relationship to the donee and the value of the gift/inheritance.

So childless people aren't being discriminated against in any way here.

I don't see any reason why people should be able to choose their parents for tax purposes.
 
T McGibney said:
I'm in my 50s and I see around me people of my age and younger opting out and retiring from retail or other businesses that they (and in some cases their parents and grandparents) painstakingly built up over many years.

That's not a problem in itself - the problem is the fact that these days the business almost invariably dies as soon as they retire early. In precious few cases is it possible for the retiring owners to give away the business let alone sell it.

Nobody wants to take on the risk and hassle of running an increasingly complex business when the returns from all that will be taxed so harshly on all fronts
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In that case, this whole line of discussion is veering off topic, since the discussion is about CAT - if you're talking about the case of people running businesses that either can't or don't end up with a feasible succession or sale, then CAT is never in point anyway.

From your reply it remains unclear why / whether marginal IT rates is the main driver in the decision of the people in your anecdote, but as I said already, we seem to be straying considerably off-topic.
 
Dr Strangelove said:
It’s more likely that the business runs on low margins and the sweat of the owner(s) and is simply not an attractive prospect for a third party.
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That's the case for a clear majority of family businesses nationally.
Dr Strangelove said:
My friend’s father turned 65 a few years ago and wanted to sell his used car business as none of his children wanted to take over. He couldn’t find a buyer as the only assets were about 20 cars and his good standing with customers. The latter wouldn’t transfer to a new owner. The value of the business was literally zero without him. Such tales are common.
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If he had a son or daughter, niece or nephew, or an employee who was willing to take over the business at a going concern, the business wouldn't die.

Dr Strangelove said:
Tax treatment doesn’t help but it’s not the main
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It certainly doesn't help. And I think it's major factor why the family butcher for example is becoming an endangered species.
 
It's interesting that the discussion has swerved to specifically concentrating on businesses. It's worth noting that business property relief is available to anyone (child, niece/nephew, concubine, mortal enemy) and reduces the value of the taxable benefit by 90%.

This means that even if there were no threshold available, on a transfer of €1m of qualifying business assets to, say, a niece/nephew, the maximum tax due would be €33k or 3.3% of the value of the assets passing.

I want to reiterate that I am more than happy to be the beneficiary of any valuable assets, business or investment, from any asset-rich people whose own family are unhappy to bear the tax on receipt of.
 
Brendan Burgess said:
If they can't give away the business, it has no value. So they won't be giving it to their children. And if their children do take a business of nil value, they won't have a CAT liability.
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Im amazed Brendan that you miss the point that a profitable going concern business will always have a value, and sometimes a sizeable value.

But as soon as that business stops being a going concern, that value will evaporate.

The point is that CAT & CGT are often levied on values that are ephemeral at best. And as the cost of those taxes is invariably carried by the acquirer, they militate against the successful transfer of a personally owned or family business.
 
I am still missing the point.

1) If a business can't be given away or sold then it has no value.
2) If the business has value and is given away, the beneficiary gets Business Relief from CAT

I am next in line behind torbeldnam to accept any valuable gifts or inheritances which have been refused because the beneficiary hasn't wanted to pay CAT.

If they have ephemeral value, I will dispose of them quickly and realise that value.
 
T McGibney said:
The point is that CAT & CGT are often levied on values that are ephemeral at best. And as the cost of those taxes is invariably carried by the acquirer, they militate against the successful transfer of a personally owned or family business.
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CGT and CAT are levied on market value (either as realized in a sale, or as estimated in a non-arm's length transfer). If that's ephemeral for tax purposes, it's ephemeral generally and is just part of the reality of a market economy.

CGT retirement relief is substantial and can eradicate liability in a lot of cases (mom & pop, €750k each = 1.5m if selling up or transferring to the eponymous niece/nephew, and the numbers go up to €10m each on a transfer to their kids).

Likewise, CAT relief reduces the taxable value to 10% of the actual value.

T McGibney said:
the cost of those taxes
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... barring horrendous tax planning, can be easily mitigated so that the army can be called off, no militating necessary.
 
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