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Tax Code.

Dáil Éireann Debate, Tuesday - 23 November 2004

Tuesday, 23 November 2004

Questions (84)

Mary Upton

Question:

128 Dr. Upton asked the Minister for Finance whether there is an anomaly in treatment of farmers who might qualify for agricultural relief on capital acquisitions tax in comparison with business relief for business persons; and if he will make a statement on the matter. [29350/04]

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Written answers

Agricultural relief and business relief are two separate and distinct reliefs. Where agricultural relief has been granted in respect of any property, business relief will not apply to that property.

Relief from capital acquisitions tax for gifts and inheritances in respect of agricultural property was introduced in 1976. The relief now amounts to a reduction of 90% in respect of the market value of the agricultural property in question.

In relation to business property, capital acquisitions tax relief for all gifts and inheritances of relevant business property was introduced in the Finance Act 1994, amounting to a reduction of 50%. Business relief now amounts to a reduction of 90% in respect of the taxable value of relevant business property taken by the beneficiary, which is similar to agricultural relief. Each of these reliefs is subject to certain criteria.

Agricultural relief applies only where the property is taken by a "farmer", who is defined in the legislation as an individual who is domiciled and ordinarily resident in the State and 80% of whose gross property consists of agricultural property, as defined, after taking the gift or inheritance. This condition was introduced to exclude individuals with substantial non-agricultural assets from qualifying for the relief, and this test does not apply in order to qualify for business relief.

There are certain conditions that must be met to avail of business relief, which do not apply to agricultural relief. Examples of these are a minimum share holding requirement in the case of shares in a company acquired by gift-inheritance, a minimum period of ownership requirement by the disponer, and a requirement that the business continues to trade for a minimum period after being acquired by gift-inheritance. For the above reasons, I do not consider that there is an anomaly between the two reliefs, as suggested by the Deputy.

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