Indo - "Revenue told Government not to tell public about lucrative tax loophole"

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Revenue told Government not to tell public about lucrative tax loophole

A loophole that allowed wealthy people to transfer valuable life assurance policies without paying tax was quietly shut down during last year’s budget.
m.independent.ie m.independent.ie

Revenue told Government not to tell public about lucrative tax loophole​

Wealthy people were able to transfer valuable life assurance policies

A loophole that allowed wealthy people to transfer valuable life assurance policies without paying tax was quietly shut down during last year’s budget.

In discussions with the Department of Finance, the Revenue Commissioners said that the public could not be alerted to the legal gap before it was closed.

It said if people got wind of it, others were likely to use the loophole for aggressive planning purposes to avoid paying tax on inheritance or gifts. Normally, life assurance policies pay out on the death of a person and trigger payment of Capital Acquisitions Tax (CAT).

However, a small number of people figured out that if the policy was transferred over to a spouse, son, daughter, or somebody else, the tax could be dodged.

Under ordinary circumstances, money paid out on such a policy would be hit with 33pc Capital Acquisitions Tax when it passed, for example, from a parent to their son or daughter.

However, the mechanism uncovered by Revenue allowed that same parent to transfer the life assurance policy to their son or daughter before it was payable. That meant when the parent later died, the policy could pay out in a way that did not trigger inheritance tax.
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hardly much of a "loophole" if you have to die to avail of it, Revenue musn't have much to be worried about. We are a heavily taxed country (except if you are US multinational) and they are worried about a tiny loophole come on !!
 
I wonder does that also affect the advice for unmarried cohabiting couples to take out separate life-of-another mortgage protection policies rather than a joint policy to reduce inheritance tax.

As described here:
lion.ie

Mortgage Protection for Unmarried Couples in Ireland - Lion.ie

If you’re buying a house in 2026 and you’re not married, the wrong mortgage protection setup could leave your partner with a large tax bill.
lion.ie lion.ie
 
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Does Revenue have a bias against citizens who wish to be tax compliant and who wish to be tax avoiders (legal) rather than tax evaders (illegal).

Are Revenue supposed to be neutral, or is it their role to do their utmost to prevent citizens from knowing tax mechanisms that are tax beneficial.
 
‘No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores" (Lord Clyde)
 
Corola said:
wonder does that also affect the advice for unmarried cohabiting couples to take out separate life-of-another mortgage protection policies rather than a joint policy to reduce inheritance tax.
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I don’t think so.

Having a life of another policy means you’ve taken it on and paid the premiums yourself (which is fine)

The issue with the loophole is that you were essentially insuring yourself and paying the premiums (but then transferring the policy to another person )

Eg naming a son as the holder of your life insurance. From their perspective, it would appear to be a life of another policy, even though they weren’t the ones paying the premiums

That's my understanding of it
 
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