Land mobility a key focus in Ireland’s agri tax review

Encouraging and attracting young farmers and new entrants into farming and land mobility, transfers via the market, whether by sale of long-term leasing, are among key focus areas in Ireland’s agricultural tax review.

This is according to officials at the Department of Agriculture and the Department of Finance in a briefing today.

A public consultation on a review of tax supports to the primary agricultural sector opened today and any recommendations will be considered in the context of Budget 2015.

Also key to the review is a look at succession, earlier lifetime transfers within families and non-family transfers where no apparent successor is available.

In addition officials from both departments will examine tax measures related to alternative farming models, collaborative faming such as farm partnerships, share farming, contract rearing or cow leasing. Farm business structures, sole trader or incorporation will also be examined.

Another key element of the tax review will be a focus on environmental sustainability and smart farming, in terms of how the tax system could better influence innovation, skill levels and maximising the adoption of best practice.

It was outlined today that as Food Harvest 2020 is the basis for Government agriculture policy, the primary objective of agri-taxation reliefs is to incentivise farmers to deliver on its objectives of smart, green, growth.

Officials at both departments were keen to stress the tax review was not about trying to reduce the amount of Exchequer support in the tax system to the agri-food sector.

“The agricultural sector is Ireland’s largest indigenous sector. It employs 165,000 people, with exports of around €10bn per annum to 160 different countries,” according to a finance department official at today’s briefing.

“What is important about the agri sector, directly and indirectly, is that it has an economic impact for the entire country and of particular importance to rural areas.

“We at the Department of Finance are very conscious that there are a lot of challenges and opportunities facing the agri-food sector in the coming years.”

He continued: “Half of all farmholders are aged 55 years or over, while just over a quarter aged over 65 and the number of farm holders aged less than 35 years is just over six per cent. Farms in Ireland are quiet fragmented with the average holding made up of 3.8 separate parcels. There are challenges and opportunities facing the sector in the years ahead.”

He stressed that it will take a “holistic” look at the sector.

The aim of the review is to identify what works and what does’t work for maximum benefit to the economy, he said.

“So this review is not about trying to reduce the amount of Exchequer support tax system that goes to the agri sector. But what we are trying to do is with that level of tax expenditure how is it best targeted to the areas that will bring maximum benefit to the economy and in particular in such as way assists the broader policy objectives in Harvest 2020.”

In addition, the Department of Agriculture has highlighted it would like to see better coherence within the tax regime system.

“The current measures in place have evolved over time in a piece meal and coherence could be improved,” an official outlined. “We want to look at what measures will add value. We are not looking at changing the level of Exchequer support to the sector. We are looking at better focusing and better targeting measures to ensure we get maximum benefit from the sector.”

The tax review will also look at the level of awareness of agri-taxation measures among farmers and among professionals dealing with farmers.

According to the Department of Agriculture, it has found in the past the uptake of some measures had not been as anticipated.

“For example in the last Budget we changed the retirement relief attached to long-term leasing and we were disappointed with the uptake this long-term leasing measure,” an official outlined. “We want to encourage greater uptake and we thought it was a good measure, but it had not been as successful as we had hoped. Part of strategy of this review is to identify what is working and not working and why.”

A survey of accountants and tax professionals dealing with the farming sector will also take place.

As well as the public consultation process, it is envisaged that the review will include an independent cost-benefit analysis and an international benchmarking exercise against countries such as the UK, France and the Netherlands.

The consultation process has opened today and will run until Tuesday 25 March.