Good news on Gift Tax and Inheritance Tax

CAT Threshold

As a result of the recent Budget announcement, the current Group A tax free threshold, which applies primarily to gifts and inheritances from parents to their children, is being increased.

The increase is from €225,000 to €280,000 and applies in respect of gifts or inheritances received on or after 14 October 2015.

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The road to abolishing the 1c and 2c coins in Ireland

Consumers in the Republic of Ireland will begin receiving cash change rounded to the nearest 5 cent from Wednesday, October 28th,2015.

The move is part of Ireland’s rounding initiative, which aims to reduce the use of 1 cent and 2 cent coins.

The rounding will only apply to cash payments with the total amount of any bill being rounded up or down to the nearest 5 cent mark. This will be done on a voluntary basis and 1 cent and 2 cent coins will remain legal tender.

Wednesday’s roll-out of the plan follows on from the successful trial conducted by the National Payments Plan in Wexford in 2013 which showed 85 per cent of consumers and 100 per cent of retailers in Wexford welcomed the national rounding of cent coins in Ireland.

The cost of producing these small coins exceeds their face value – a 1 cent coin costs 1.65 cent to produce while a 2 cent coin costs 1.94 cent.

Belgium, Denmark, Hungary, Finland, Holland and Sweden have already adopted a symmetrical rounding policy on smaller coins.

What will happen the 1c and 2c cent sweets !!

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Email scam alerts

Beware of unexpected emails that seem to come from law firms or a friend/colleague, requesting that you open an attachment.

The email may include content such as legal threats if the attachment is not opened, or claim that the attachment is an invoice or payment receipt.

If you have any doubt about the email’s validity, do not open this attachment as it may be a virus which can compromise your data and your firm’s computer network. Sometimes the objective is to obtain money or personal information.

If you get an unexpected email from a friend or colleague asking for sensitive information, to open an attachment or click on a link, it’s best to call them and verify that the request is really from that person before you continue.

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Making a complaint against a Solicitor or Legal firm in Ireland

Sometimes, we get queries where people have problems with the services or legal bill or advices received from a solicitor.

FIRSTLY, we recommend that like any relationship, you should discuss your concerns with the other party ( i.e. the solicitor involved) and get an agreement in writing about how you both can move forward in an amicable way.

If you are not happy, then, you should write to one of the other solicitors in the firm, or arrange a meeting with them to express your concerns. if the solicitor is a “one-man operation”, you might like to chat to another solicitor in the county who might liaise with your solicitor to see if matters can be resolved.

If you still don’t get satisfaction, then the Law Society of Ireland, as the regulatory body for Irish solicitors, may be able to help you depending on the circumstances as outlined here.

Complaints the Society may Investigate

The Society may investigate complaints against solicitors made by or on behalf of clients (including beneficiaries) alleging:

A. Inadequate Professional Services

This is defined in Section 8 of the 1994 Solicitors (Amendment) Act as services which are inadequate in any material respect and are not of a quality that could reasonably be expected of a solicitor or a firm of solicitors.

B. Excessive Fees

  • The Society can deal with a complaint by or on behalf of a client that a bill is excessive.
  • The Society is not permitted to consider any complaint about a bill that is more than five years old.

A client also has the option, within a year of delivery of the bill, of requesting his solicitor to refer the bill to theTaxing Master.

C. Misconduct

The statutory definition of Misconduct in the Solicitors Acts includes but is not restricted to:

  1. Conduct tending to bring the solicitors’ profession into disrepute.
  2. The contravention of a provision of the Solicitors Acts 1954-2002, or any order or regulation made thereunder.

Visit the Law Society’s website for more information =

It’s expected that in 2016 a new Solicitors Regulatory Authority will be established to oversee and regulate Solicitors practising in Ireland.



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Good news for compensation claimants in Setanta Insurance cases

On Friday last, the High Court confirmed that the Motor Insurers Bureau of Ireland is liable in respect of claims against the policyholders of the insolvent insurance company, Setanta. The Law Society presented the legal arguments against the MIBI in this case. The judgment means that the estimated 1700 outstanding claimants can now look to the MIBI to meet their claims.

In his decision in The Law Society v the MIBI, Mr Justice Hedigan held:

  1. The MIBI is liable to pay out in respect of claims against persons who are insured with Setanta at the time of their entry into liquidation in April 2004, and
  2. the High Court may not approve payments under section 3 of the Insurance Act 1964 (as inserted by Section 4 of the Insurance (Amendment) Act 2011) unless it appears that the MIBI is unlikely to meet the claim notwithstanding its obligation to do so.

This case was initiated by the Accountant of the Courts of Justice pursuant to Order 3, Rule 22 of the Rules of the Superior Courts for the purpose of determining these specific issues of law. The Law Society acting as legitimus contradictor presented the legal argument against MIBI.

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Have you assets in other countries in the EU ?

The EU Succession Regulation, devised to assist with administration of estates including assets located in multiple jurisdictions, came into force on Monday 15 August 2015 and applies to deaths after this date.

Clients who hold property in EU jurisdictions should take relevant advice before executing or updating their wills, particularly if they intend their Irish will to deal with their worldwide estate. Similarly, clients who intend making a will in another  EU country in relation to their property in that EU country should seek appropriate advice. Advice should be obtained from ourselves and from your lawyer in the jurisdiction where the asset is located.

It will be important for clients to generally understand the rules, given the number of Irish people with assets in the relevant jurisdictions, even though Ireland, the UK and Denmark have opted out of the Regulation.

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Bad news on the injury claims front for Kilkenny Solicitors

If Kilkenny solicitors were hoping to earn an income from injury compensation claims, then they would be best move to another county !!

According to the Injuries Board’s latest report for 2014, Kilkenny has yet again come out as the county with the lowest claims for compensation per capita in the country. Like the All-Ireland hurling titles, Kilkenny dominates for the last decade holding the gold spot every year.

Overall, €281.21 million was granted in personal injury awards last year, a 16 per cent increase on 2013. The average sum awarded was €22,642, which is down a couple of per cent from 2013.

The board’s annual report showed that 50 awards per 10,000 people were made in Limerick last year, 24 above the state average. The gap has widened between Limerick and all other counties over the past five years.

Awards in Kilkenny were just 50 per cent of the national average for 2014, with a rate of 13 per 10,000 people. Awards within the county rose by three per 10,000 over the past five years, the lowest of any county.

In Longford which had the largest single year increase, the number of awards jumped by 44 per cent last year after a minor decrease in 2013.

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Health of solicitors ??

In the UK, solicitors continue to be in better health than the general population and the average number of sick days they take has fallen. However, most solicitors continue to work under moderate stress. The UK Law Society has published research on the health and wellbeing of solicitors.

Law Society president Jonathan Smithers said:

‘Law can be a demanding career. Many of us are drawn to the intellectual challenge and thrive on the high pressure the work entails, but we should also consider our own health and wellbeing.

‘The number of solicitors going to work when they should be taking sick leave to get better has fallen, but many still go to work when they are unwell.

‘Solicitors experiencing stress or other sickness at work should speak to colleagues or their line manager about it. The Law Society has a free helpline that offers confidential support for all our members. We also provide a range of resources to support good practice management.’

The main findings of the survey are:

Good health: 85 per cent of solicitors reported being in good health, a slight fall from 88 per cent in 2013 but still four percentage points above figures for the working population nationally.

Sick days: On average, those taking time off due to ill-health or injury took 5.7 days, a fall from 6.6 days in 2013.

Work ethic: 39 per cent of solicitors reported going to work when sick leave should have been taken, a fall from 45 per cent in 2013.

Stress levels: 96 per cent of solicitors said they experienced negative stress, with 19 per cent at ‘severe’ or ‘extreme’ levels, a slight increase from 16 per cent in 2013. Workload and client expectations were identified as the most common causes of stress in the Law Society’s 2013 research.

LawCare chief executive Elizabeth Rimmer said:

‘LawCare is here to help anyone working in the legal community who may be finding the demands of law tough. Our website offers a range of practical information about wellbeing and we provide a free and completely confidential helpline for anyone who needs a listening ear about personal or professional problems. Everyone answering the phone has worked in the law and understands the day-to-day pressures lawyers face.

‘Lawyers are used to solving other people’s problems and often find it hard to admit that they are not coping with the demands of work and may be worried that not coping may be seen as a weakness by colleagues. This shouldn’t be the case. It can be very cathartic to talk to someone about how you are feeling. Many people who call our helpline say that the chat on the helpline has really helped them to feel better and put things in perspective.’

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Agricultural Relief on inheritances and gifts

Revenue have published an interesting guide on the above, which we re-print as follows =

Capital Acquisitions Tax

3. Agricultural Relief (Section 89 of the Capital Acquisitions Tax Consolidation Act 2003)

3.1 Capital Acquisitions Tax relief is available in respect of gifts and inheritances of agricultural property, as defined in Section 89(1), subject to certain conditions being satisfied. This relief has been amended in Finance Act 2014 to take account of recommendations of the Agri-Taxation Review, designed to ensure productive use of agricultural property.

3.2 Conditions
In addition to the existing conditions, including the requirement that a farmer’s agricultural property must comprise 80% by value of the farmer’s total property at the valuation date, the following conditions also apply to gifts or inheritances taken on or after 1 January 2015 where the valuation date also arises on or after 1 January 2015.
The beneficiary must:
• Farm the agricultural property for a period of not less than 6 years commencing on the valuation date or
• Lease the agricultural property for a period of not less than 6 years commencing on the valuation date. The agricultural property may be leased to a number of lessees as long as each lease and lessee
satisfies the conditions of the relief. Revenue will accept that a lease may be to another individual, to a partnership or to a company whose main shareholder and working director farms the agricultural property on behalf of the company. [Where land is leased to a company that is owned equally by an individual and that individual’s spouse or civil partner, and at least one of them satisfies the working director and the farming requirements, the relief will apply.].
In addition, the beneficiary (or the lessee, where relevant) must
• Have an agricultural qualification (a qualification of the kind listed in Schedule 2, 2A or 2B of the Stamp Duties Consolidation Act 1999) or
• Farm the agricultural property for not less than 50% of his or her normal working time.
The agricultural property must also be farmed on a commercial basis and with a view to the realisation of profits – thus confining the relief to genuine farmers.
If during the 6 year period a beneficiary farms the agricultural property and then decides to lease it, relief will not be withdrawn, provided the lease and the lessee satisfy the conditions of the relief (for the remaining period of the 6 years). Similarly, if a beneficiary initially leases the agricultural property and decides, within the 6 year period, to end the lease (provided the lessee agrees) and to personally farm the agricultural property, relief will not be withdrawn.

3.3 “Normal Working Time” Test. Revenue will accept, for the purposes of this relief, that “normal working time” (including on-farm and off-farm working time) approximates to 40 hours per week. This will enable farmers with off-farm employment to qualify for the relief provided they spend a minimum of 20 hours working per week, averaged over a year, on the farm. If a farmer can show that his or her “normal working time” is somewhat less than 40 hours a week, then the 50% requirement will be applied to the actual hours worked –
subject to being able to show that the farm is farmed on a commercial basis and with a view to the realization of profits.
It is expected that in the majority of situations it should be clear from the level of farming activity being carried on that the normal working time requirement is satisfied. If there is any doubt Revenue will consider all information (including farming records) provided by a farmer in relation to his or her normal working time and farming activities.
If in exceptional situations if it can be shown that, on an on-going basis, certain farming activities, e.g. farming involving the occupation of woodlands on a commercial basis, are carried out on a commercial basis and with a view to the realisation of profits, but do not require 50% of normal working time / 20 hours per week to be spent on such farming activities, Revenue will take this into consideration in deciding whether the relief is due.

3.4 Farming on a Commercial Basis
Whether a person is farming on a commercial basis and with a view to the realisation of profit can only be determined by reference to the facts in each case. It is expected that based on the facts, it will normally be clear whether this requirement is satisfied.
The fact that a farmer may make a loss in any year will not in itself result in relief being refused or withdrawn. Clearly, if a farmer continuously makes losses year on year, the circumstances would have to be examined carefully to see whether that person is farming on a commercial basis and with a view to the realisation of profit.
Single farm payments will be included as farming income in the computation of profits or losses in the normal way.

3.5 Withdrawal of Relief Agricultural relief is subject to withdrawal if the agricultural property is disposed of within 6 years from the date of the inheritance or gift and the proceeds of disposal are not reinvested as required within Section 89(4)(a).
In relation to gifts and inheritances taken on or after 1 January 2015, the relief is also subject to withdrawal if, within a period of 6 years from the valuation date, any of the conditions governing the relief introduced in Finance Act 2014 cease to be satisfied.
In this regard, if a beneficiary who inherits or is gifted agricultural property disposes of it within 6 years but reinvests the proceeds in other farmland used by him or her for farming or leases it in the qualifying manner, the beneficiary will not be regarded as having ceased to use the agricultural property for the purposes of the relief. In effect Section 89(4), CATCA 2003, which provides for the replacement of agricultural property with other agricultural property within 6 years of the inheritance or gift, will be regarded as applying.
It should be noted, in relation to gifts and inheritances taken on or after 1 January 2015, that the 6 year period of the use of agricultural property for farming by the beneficiary or by a lessee runs from the valuation date. Accordingly, if any of the following events occurs within 6 years of the valuation date agricultural relief may be withdrawn:
• Cessation of farming by the beneficiary without leasing the land to a lessee who farms the land for the remainder of the 6 year period
• Disposal of the agricultural property without reinvestment in further agricultural property that is farmed by the beneficiary or by a lessee for the remainder of the 6 year period.
Where a taxable gift or a taxable inheritance is taken by a beneficiary subject to the condition that the whole or part of that taxable gift or taxable inheritance will be invested in agricultural property and such condition is complied with within 2 years after the date of the gift or the date of the inheritance, then the gift or inheritance is deemed to have consisted at the date of the gift or at the date of the inheritance and at the valuation date of agricultural property to the extent to which the gift or inheritance is subject to such condition and has been so invested.
The 6 year period of the lease/use of farming by the beneficiary will run from the date of the investment by the beneficiary in the agricultural property.
In accordance with self assessment principles it is the taxpayer’s duty to make any necessary amendment to returns / self assessments to ensure relief is withdrawn where appropriate.

3.6 As the additional requirements applied to this relief by Finance Act 2014 relate to carrying on of farming activities – intended to ensure productive use of the agricultural property – they apply from the valuation date. In the case of a gift of agricultural property, the date of gift is the “valuation date”, whereas in the case of an inheritance the valuation date can be as early as the date of inheritance – where for example the person inheriting farms the agricultural property from the date of death of the deceased – or in other situations from the date of grant of probate or administration.
The focus of the amendments to Section 89, Capital Acquisitions Tax Consolidation Act 2003 is to give the relief to active farmers. As farmers cannot actively farm the agricultural property until they are in a position to commence farming, the reference in Section 89(4B) to “valuation date” is to give individuals who inherit land an opportunity to commence farming or, where relevant, to make arrangements for the agricultural property to be leased under the amended wider relief – as it can take time for a person to do so from the date of inheritance. The existing 80% asset “farmer” test applies at the valuation date and not at the date of inheritance and as such gives a window of opportunity, time wise, for a beneficiary to arrange his or her affairs so as to meet that 80% test. A similar window of opportunity, time wise, will be allowed to a beneficiary to meet the new active farmer test.
Where farming commences between the date of the gift or inheritance and the valuation date, Revenue will accept that the 6 year period will commence from the earliest time that the agricultural property is first farmed, whether by the person who inherits or is gifted the farm or by a lessee.

3.7 Where a beneficiary inherits agricultural property and intends to farm it, but is genuinely unable to do so immediately from the valuation date because of existing work commitments or other personal circumstances, the relief will not be refused where the beneficiary otherwise fulfils the requirements of the relief on taking up farming i.e. where the conditions of farming continue for 6 years from the date the farming is taken up. Examples of such situations include:
• The beneficiary may have existing work commitments that may take time to complete.
• The beneficiary may be living and working abroad, such that it may take time to organise a return to Ireland – including completion of existing work commitments.
• The beneficiary may be a full-time student whose studies are not completed.

3.8 Where a beneficiary who takes a gift or inheritance of agricultural property, that includes agricultural land and a farm house, leases the land to an individual, a partnership or a company (that will farm the land for the minimum requisite 6 year period and will satisfy the farming conditions outlined above) but retains the farm house and resides in it as his or her only or main residence, Revenue will not seek to restrict any part of the agricultural relief, granted to the beneficiary on the gift or inheritance, referable to the farmhouse itself in those circumstances.
Similarly, if the agricultural property includes plant and machinery or livestock, but a lessee only requires the land, agricultural relief will not be restricted where the land comprises substantially the whole of the agricultural property.

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Compensation for shock on hearing of child’s death

Damages awarded for depression caused by shock of hearing of child’s death in road traffic accident

Purcell vs Long [2015]IEHC 385 (High Court, Barr J, May 15th, 2015)

High Court awards €225,150 to a mother who suffered severe depression triggered by an acute stress reaction upon hearing of her son’s death in a road traffic accident. The mother had suffered previous psychiatric illness and depression, but this did not exempt the wrongdoer.

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