Vol. 483 No. 1
47 Mr. Penrose asked the Minister for Finance if he intends to change the existing rules on the taxation of farm land leases between family members to that pertaining to leases between unrelated parties to a lease; and if he will make a statement on the matter. [15491/97]
Under section 10 of the 1985 Finance Act, there is an exemption from income tax in respect of the first £4,000 of annual leasing income where the leasing is for a period of not less than five years and in respect of £6,000 where the leasing is for a period of not less than seven years. The exemptions are available to lessors of agricultural land aged 55 years or over or to those who are permanently incapacitated by mental or physical infirmity from carrying on farming.
These tax exemptions apply only in respect of leases to qualifying lessees. In this context, "qualifying lessee" specifically excludes from the scope of the relief any leases made between closely connected relatives. 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. The restriction covering leasing to closely connected relatives is a standard anti-avoidance measure without which the relief would be open to manipulation with spurious arrangements being set up, such as the passing back to the lessee of rent on which tax relief had been claimed by both.
However, I would like to point out that in the case of permanent transfers of land between family members, such as by gift or sale, very generous stamp duty and capital acquisitions tax reliefs already apply.
