Although the Minister for Finance, Mr McCreevy, is expected to address capital acquisitions tax in this week's Budget, some fear the changes will be random and benefit only certain taxpayers.

CAT is the overall name for gift and inheritance taxes, discretionary trust tax and probate taxes. Most taxpayers are primarily affected by inheritance and gift taxes. These rules set limits, or thresholds, on the amount an individual may receive tax free.

Two months ago, it was widely reported that near relatives and those in non-marital relationships would benefit in the Budget. Property taxes are expected to be cut by a sizeable margin. Specifically, the thresholds at which capital acquisitions tax is applied to the inheritances of sons, daughters and relatives of large property owners will be widened to take account of surging property prices. Changes in the tax code to accommodate second marriages, homosexual couples and other interpersonal arrangements are also expected.

The Institute of Taxation and other groups campaigning for CAT reform have submitted Budget proposals to Government. "If you do something for cohabiting couples that means only some people can avail of the changes. We think they should flatten it out, make it simple to understand and exempt the principle private residence from taxes. They should tax everyone at 10 per cent," says Ms Jean Cashman, a member of the institute.

Under current CAT legislation, there are several exemptions and reliefs mainly for farmers and business people. If granted, these reliefs allow a 90 per cent cut in CAT liability when passing on a farm or business. Other reliefs benefit those who have lived with the person leaving the inheritance, or disponer, in the period immediately before their death.

Siblings over age 55 who have lived with the disponer at least five years previously may avail of a lesser relief than farmers or business people. To benefit from similar CAT relief, other close relatives of any age must have lived in the home for 10 years previously. Recipients may not be "beneficially entitled in possession to any other house". The legislation heavily favours carers and single relatives.

Favoured nephews or nieces may be considered a child for CAT purposes if they have worked at least 15 hours per week for the person leaving the inheritance for at least five years. This usually applies to family farms and businesses. Those informally adopted, or orphaned, and brought up by a non-farming or business-owning friends or relations are hit hard by CAT.

A major difficulty in the legislation for these taxpayers is that the maintenance of children is not treated as a gift in the lifetime of the disponer, says Ms Cashman. "If I had young children and I died, every penny spent on their education, even where they live, goes into their inheritance threshold," she said. This combined with any assets the child may receive from the parents estate at adulthood may result in an exorbitant tax bill.

Although Revenue has review and appeals procedures in place, some hardship requests are not granted relief. For example, a man reared by his aunt and uncle as a son, although he was not formally adopted, says his circumstances were not taken into consideration when he appealed Revenue's decision not to grant him relief as a child rather than a nephew. He claims Revenue said there was no provision in law for this situation.

The tax spokesman for the Institute of Chartered Accountants in Ireland, Mr Kieran Ryan, says it will be difficult for the Minister to radically alter CAT. "There are things he could do but they'd have to be fairly tight conditions with a considerable burden of proof. If there is a significant inheritance tax bill there will always be a temptation to put in a false claim."

The Minister and Revenue Commissioners have shown themselves as being compassionate, says Mr Ryan. "There is a general willingness to move on legislation if there wouldn't be too many opportunities for abuse."

If an informally adopted person can easily show where and how they lived through school records, medical records or social welfare allowances the claim would be easier to substantiate. They must find some practical way of being able to distinguish them from siblings who stayed with the parents, he said.

Ms Cashman thinks the Minister may be "rowing back" from his pledge of substantial CAT reform. She believes the law must be changed to provide more definite terms rather than leaving those in unusual circumstances to the mercy of the appeals system. "These are random reliefs and hardship clauses cannot be relied on. It's just not good legislation," she says.