Significant tax changes announced in Budget 2015
Budget 2015 contains 12 specific agri-taxation measures, as part of a a 25-part package designed to encourage more productive use of agricultural land, according to the Minister for Agriculture, Food and the Marine, Simon Coveney.
To increase access to land and the more productive use of land, the Minister announced five measures:
- increase the income thresholds for relief from leasing income by 50%;
- introduce a fourth threshold for lease periods of 15 years or more;
- Remove the lower age threshold of 40 years for eligibility;
- Allow non-connected limited companies as an eligible lessee; and,
- Relieve stamp duty on long-term leases (five years or more) for agricultural land
Four measures were introduced to assist succession and the transfer of farms:
- A targeting of Agricultural Relief from Capital Acquisitions Tax to qualified or full-time farmers or to those who lease land on a more long-term basis;
- For transfers under Retirement Relief, extension of the eligible letting period of a qualifying asset to 25 years;
- For transfers other than to a child under the Retirement Relief, as a once-off measure until the end of 2016, allow con acre lettings as eligible; and,
- The extension of Stamp Duty Consanguinity Relief, ie relief to related persons, on non-residential transfers to the end of 2017.
The taxation measures introduced were:
- Capital Gains Tax relief for farm restructuring now includes whole-farm replacement as eligible and the measure has been extended to the end of 2016;
- The income averaging measure has been enhanced by increasing the averaging period from three to five years; and,
- The income averaging measure will also now allow averaging to be available where a farmer/their spouse are engaged in an on-farm diversification trade/profession.
The Minister said there was a lot for agriculture in Budget 2015. “The taxation package is the result of over 10 months of negotiation between his Department and the Department of Finance. €7,000 of income tax free, €18,000 after this budget if you have enough land to draw down that income. Leasing 7-10 years, it is up to 22,500 per year. If you are leasing for 10-15 years you now can earn €30,000 per year tax free. More than 15 year lease can earn up to €40,000 per year.
The Minister said: “Long term leasing particularly allows young farmers to invest significantly into the future and will allow them to get Finance and bank loans as a result.”
“I am pleased that the Minister for Finance and I could facilitate this joint initiative, which has given us a unique opportunity to examine a critical element of Government support to the agriculture sector in the context of the Government strategy of expansion and increasing exports under Food Harvest 2020”.
The Minister added “The Agri-taxation Review has produced a comprehensive taxation strategy for the sector. The Government’s commitment to agriculture is evidenced by the immediate implementation of the majority of the Report’s recommendations in Budget 2015. I am confident that this package of measures will lead to a more efficient and productive sector as we look forward to the challenges and opportunities ahead. This is an exciting time for Irish agriculture and I expect the impact of these measures to be felt for a generation to come”.