Revenue Note for Guidance

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Revenue Note for Guidance

113 Tax, in relation to certain legislation

Summary

This section provides that inheritances will be treated as a death duty for the purposes of certain provisions of the Succession Act 1965 and that capital acquisitions tax charged on registered land need not be registered in order to take effect.

Details

(1) Section 34(3) of the Succession Act 1965 deals with the administration bond, which is a promise given to the President of the High Court by a third party (often an insurance company) that if the administrator of a deceased person’s estate defaults in the administration, the third party will make good the amount defaulted.

(1)(a) The purpose of paragraph (a) is to bring inheritance tax within the cover of an administration bond by providing that the bond must make provision for the payment of the tax. The administration bond applies to any case of a grant of administration, including administration with will annexed.

(1)(b) The definition of a pecuniary legacy in section 3(1) of the Succession Act 1965 includes any other general direction by a testator for the payment of money, including all death duties free from which any devise, bequest or payment is to take effect. The purpose of paragraph (b) is to extend this to inheritance tax. This means that a direction in a will to pay a successor’s inheritance tax out of some fund other than that taken by the successor is itself a pecuniary legacy, and the benefit to the successor will be taxed accordingly.

(1)(c) Paragraph 8 of Part II of the First Schedule to the Succession Act 1965 provides that the order of application of assets of a solvent estate does not affect the liability of land to answer the death duties imposed on such land. Paragraph (c) extends this rule to inheritance tax.

(2) Section 72 of the Registration of Title Act 1964 lists certain burdens in relation to registered land which do not need to be registered in order to take effect. Subsection (2) brings inheritance tax and gift tax within the ambit of that section.

Relevant Date: Finance Act 2015