Penal taxation on ARF

R

Realcork

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I have always felt the Irish income tax system is unfair by providing married tax credits etc but this seems to carry through on death . From reading ARF documentation it seems that if an ARF dies without a spouse or child the ARF is taxed at individuals marginal rate of tax and then the balance is liable to CAT. Eg I die single with an ARF of 1 million , the government automatically take 410k and say i leave the remainder to niece they take an addition 33% in CAT. Is my reading on this correct?
 
Correct.
An ARF is a pension vehicle. Pre the introduction of ARFs, you would be in receipt of an Annuity which typically ceases on death with no further benefit (unless remainder of 5 year guarantee or a Spouses Pension). With the introduction of ARFs, a spouse can take over the ARF on the death of the retiree. On the death of the spouse (if asset is inherited by a child over age 21) Income Tax is deducted but there is no liability to CAT.
If no spouse and no children, then both Income Tax and CAT applies. The ARF was never intended to be an asset that could pass Tax free to a niece or nephew.
 
Conan said:
Correct.
An ARF is a pension vehicle. Pre the introduction of ARFs, you would be in receipt of an Annuity which typically ceases on death with no further benefit (unless remainder of 5 year guarantee or a Spouses Pension). With the introduction of ARFs, a spouse can take over the ARF on the death of the retiree. On the death of the spouse (if asset is inherited by a child over age 21) Income Tax is deducted but there is no liability to CAT.
If no spouse and no children, then both Income Tax and CAT applies. The ARF was never intended to be an asset that could pass Tax free to a niece or nephew.
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Thanks for this simple explanation, just on further question the income tax payable by children would be at their tax rates...correct.
 
If inherited by children over age 21, the tax rate is 30%.
if no children, and inherited by niece/nephew (for example), the tax rate is marginal tax, so 40%.
 
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