Two major stamp-duty reliefs for farmers are due to expire at the end of this year, with the Department of Finance set to decide their faith by this year’s national budget.
The young trained farmer stamp-duty relief and the farm consolidation stamp-duty relief are currently up for review by the department, as before previous budgets, in which it was decided that the reliefs should be retained until the end of this year.
The government’s Tax Strategy Group (TSG) – which has met every year since the early 1990s to discuss possible taxation changes in national budgets – released a number of documents today (Wednesday, August 10).
As part of those papers, the group released a document on capital and savings taxes and stamp duty.
The TSG is chaired by the Department of Finance and includes senior officials and political advisers from a number of civil service departments and offices.
The document notes that the department is currently examining whether these two stamp-duty reliefs should be extended and, if so, for how long.
Young farmer stamp-duty relief
At present, a full relief from stamp duty is currently available for the conveyance of farmland, where the recipient is under 35 years old and is the holder of a specified educational and training qualification.
The farmer must also commit to retaining and farming the land for at least five years, and to spend no less than 50% of their normal working time on the farm. The aim of this relief is to promote lifetime transfers of land and encourage young people into farming.
The TSG paper noted that the age profile of Irish farmers continues to be an issue.
It also cited analysis which showed that encouraging land mobility to younger, active farmers is likely to result in increased output in the sector.
According to the paper, it is still the position of the Department of Agriculture, Food and the Marine that this relief is “an integral part of the package of measures assisting succession and the transfer of farms”.
However, it also states that, due to increasing rates of stamp duty, the amount of revenue forgone under this relief has increased over the years and was nearly twice as high last year as it was in 2012. However, both the quantity and quality of land also influence the revenue forgone figures.
Taking all this into consideration, Department of Finance officials will make a recommendation to Minister Paschal Donohoe in advance of Budget 2023 on whether the relief should be retained or scrapped.
Farm consolidation relief
Farm consolidation stamp-duty relief provides that a stamp duty rate of 1% (instead of the normal 7.5% rate for non-residential property) can apply to acquisitions and disposals of land, where the transaction qualifies for a farm-restructuring certificate from Teagasc.
This form of relief originally expired in 2009, but was reintroduced in 2017 in order to mitigate the impact of the increase in the rate of non-residential stamp duty. It is due to expire at the end of this year.
The purpose of this relief is to encourage the consolidation of farm holdings in order to reduce farm fragmentation and improve the operation and viability of farms.
Teagasc is required to certify that purchases, sales and transfers of land are being carried out for genuine consolidation purposes.
The relief can be availed of where farm holdings are consolidated through linked sales and purchases, and also where land is transferred as a gift or exchange.
Stamp duty of 1% is applied in this case, where the linked acquisition and disposal take place within 24 months of each other.
According to the TSG paper, the Department of Finance is aware of suggestions from “interested parties” that the amount of time that can pass between these linked transactions should be increased to 36 months.