Capital Acquisitions Tax (“CAT”) Reporting
There have been some recent updates to Capital Acquisitions Tax (“CAT”) reporting obligations in respect of certain loans between close relatives.
The new rules, which came into effect from 1 January 2024, apply to both new and existing loans and apply irrespective of whether any tax is due or not. This new tax filing requirement does not create any new tax liabilities.
The rules deem the borrower to have received a benefit on 31 December each year, meaning the CAT return would need to be filed no later than 31 October in the following year. Therefore, the first mandatory filing date will be 31 October 2025. There is also a view that there is an earlier reporting requirement and that reportable loans that were in place on 31 December 2023 must be reported by 31 October 2024. Clarity on this point is being sought from Revenue.
You will be required to submit a CAT return if:
you have received a loan directly or indirectly from a close relative,
no interest has been paid or a below market rate of interest has been paid on the loan during the calendar year,
no interest has been paid within 6 months of the end of the calendar year
and
the balance on the loan exceeds €335,000 on at least 1 day in the calendar year.
Close relatives include includes parents, grandparents, siblings, aunts, and uncles.
It is important to note that this filing obligation also applies if:
the loan is from a company, where the beneficial owner of the company is a close relative,
the loan is to a company, where the beneficial owner of the company and the person making the loan are close relatives,
or
the loan is from one company to another company, where the beneficial owner of the borrowing company and the beneficial owner of the lending company are close relatives.
If a CAT filing obligation arises, the following will need to be disclosed on the return:
the name, address and tax reference number of the person who made the loan.
the balance outstanding on the loan.
Such other information as the Revenue Commissioners may reasonably require.
As this new reporting obligation applies to both existing and new loans, it is important to review all such loan arrangements in place to determine whether a filing obligation will apply.