Concern has been expressed over the definition of an active farmer under the 2014 Finance Bill, which ICSA President Patrick Kent has says will rule out vital agricultural relief from Capital Acquisitions Tax in the case of many farm successors.
According to Kent, the problem is that Section 74 of the Finance Bill narrowly defines active farmers as devoting at least 50% of their working time to farming.
However, he said many farmers who are inheriting farms involved in low income sectors such as cattle and sheep have no option but to also work off-farm. In these cases, it will be potentially impossible to claim that the farm work is taking up another 40 hours on top of a 40-hour (or more) off-farm job.
“The recent changes in the Budget were designed to incentivise individuals who inherit land but who have no interest whatsoever in farming it to long-term lease it to active farmers. ICSA agrees that it is desirable to support long-term leasing but there is no reason to penalise active part-time farmers.
“Agricultural relief is vital because it provides a 90% reduction in the value of agricultural assets for the purposes of calculating liability for Capital Acquisitions Tax. Where a farm is being inherited, failure to avail of agricultural relief could mean a substantial tax bill running into tens of thousands even on relatively small- and medium-sized operations.
“The solution is to ensure that farmers who are engaged in farming and who gained the appropriate agricultural qualification such as a Green Certificate at the time of commencing farming should be deemed to be active farmers.”
ICSA is lobbying to get this amended. “This needs to be amended at Committee stage and it is urgent as the Finance Bill is due to be concluded in the Oireachtas in December with a view to having the new rules in place from January 1, 2015.”