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.