Vol. 439 No. 3
59 Mrs. Doyle asked the Minister for Finance if he will extend the income tax concession on the first £3,000 of lease to inter-family leases under the farmers' early retirement scheme; and if he will make a statement on the matter.
Section 10 of the 1991 Finance Act increased from £2,000 to £3,000 for a fiveyear lease and to £4,000 for a sevenyear lease the exemption from income tax available under section 10 of the Finance Act, 1985, to lessors of agricultural land who are aged 55 years or over or who are permanently incapacitated by mental or physical infirmity from carrying on farming. As an anti-avoidance measure, "qualifying lessee" as defined was intended to exclude from relief, leases made between closely connected relatives. The question of "connection" is determined by reference to section 16 of the Finance (Miscellaneous Provisions) Act, 1968, which is the standard test for "connection" for income tax purposes. A person is connected with an individual if that person is the individual's husband or wife, or is a relative, or the husband or wife of a relative of the individual or of the individual's husband or wife. A relative in this context is defined as meaning brother, sister, ancestor or lineal descendant. Without this restriction the relief would be open to manipulation, with spurious arrangements being set up, such as the passing back of rent on which tax relief had been claimed by the lessee.
The EU early retirement scheme for farmers, recently launched by the Minister for Agriculture, Food and Forestry will provide payments to full-time farmers between 55-65 who retire from farming definitely and transfer their farms by gift, lease or sale to other farmers. It should not be necessary to provide an income tax incentive as well to encourage such land transfers between family members especially one which is open to abuse as mentioned above.
