Tax reliefs to help farmers pass their farms to relatives and maintain a working farm within the family unit was discussed recently in the Oireachtas, just before the Summer recess.
Wicklow Fine Gael TD Deputy Simon Harris asked Simon Coveney TD, Minister for Agriculture, Food and the Marine, for an update on the current tax reliefs available to farmers.
In a written reply, the minister outlined the current tax reliefs available and also stressed he is liaising closely with the Minister of Finance regarding changes, if any, to these reliefs in the upcoming Budget 2014.
“Capital gains tax relief (CGT) is available to farmers over 55 years who dispose of certain qualifying assets. This relief, which is more commonly known as ‘retirement relief’, continues to be available having been in place for many years,” he outlined,” he said.
Among the criteria to apply is:
Firstly, the chargeable business asset of the individual which he/she has owned for at least 10 years up to the disposal date and which have been his/her chargeable business assets throughout the 10 years.
Secondly, land leased under the Scheme of Early Retirement from Farming, where for a period of not less than 10 years prior to the land being leased it was owned by the person claiming relief and was farmed by him throughout that period.
Thirdly, land that was let at any time in the 15 years before disposal but, prior to its first letting, was farmed for 10 years by the owner and the disposal is to a child.
There are two separate elements to this type of CGT relief, the minister noted in a written reply. He outlined the elements currently available, which was as follows:
a) Disposal of a business or a farm to one’s child;
• Irrespective of the amount of consideration for the disposal, full relief may be claimed by a person on the disposal to his child. If the child disposes of the asset within six years clawback applies. To incentivise earlier lifetime transfer of holdings it was announced in Budget 2012 that, from January 2014, the amount of full relief in the case of transfers to children will be reduced from an unlimited amount to €3m for those aged over 66 years of age, but will be retained at the unlimited level for those aged 55-66 years. A two-year lead-in period for these changes was put in place to allow for an orderly transition.
b) Disposal of a business or farm to a person other than one’s child;
• Where the consideration is less that €750,000 there is full relief for those aged over 55 years. Where the consideration is over €750,000 marginal relief is available which reduces the CGT payable to an amount equal to half the excess over €750,000. Budget 2012 introduced from January 2014 onwards a lowering of the amount of full relief in these cases from €750,000 to €500,000 for those aged over 66 years of age. The level will be retained at the 750,000 level for those aged 55-66 years.
According to the minister, Budget 2012 introduced new lower stamp duty rates for land transfers with a 1 per cent rate now applicable to transfers to close relations until the end of 2014. The 1 per cent rate is half the rate applicable to non-family transfers.
In addition Budget 2013 extended the longstanding 100 per cent relief on stamp duty for land transfers to certain young trained farmers for a further period of three years until end of 2015, he said.
“The range of tax measures applicable to the agricultural sector announced in recent Budgets reflect the Government’s commitment to supporting younger farmers through encouraging earlier inter-generational transfer of farm holdings and minimising the costs associated with transfer of farm holdings,” the Minister said. “These measures have created a positive environment for structural change to occur and will help facilitate meeting the ambitious expansion targets planned in the Food Harvest 2020 strategy.”