The tax changes in Budget 2012 encourage partnership formation and incentivise inter-generational land transfer. I believe they will be of real benefit to young farmers and towards developing the sector and the economy generally.
One of the most significant new measures introduced in Budget 2012 was the new stock relief incentive to encourage farm partnerships. Subject to EU State Aid approval, the current rate of 25% stock relief for registered farm partnerships, will increase to 50%, and, for certain young trained farmers entering such partnerships, a rate of 100% stock relief will be available. This new incentive will run until December 2015. I support farm partnerships because I believe that collaboration through partnership can bring more innovative and energetic young prospective farmers into farming while improving farm structures and production levels. Encouraging farm partnerships will also support the dairy herd expansion required over the coming years and enable Irish farmers to avail of the opportunity presented by the abolition of EU milk quotas in March 2015.
Budget 2012 also reduced the stamp duty rate on agricultural land from 6% to 2%, with immediate effect. In addition, half the rate (1%) will be applicable on transfers to close relatives until the end of 2014. This change should stimulate a stagnant land market — currently only 0.5% of total agricultural land is offered for sale annually — and ensure that land transfers to more active producers. It will also promote inter-generational transfer, as the cost of lifetime transfer to transferees who do not qualify for the young trained farmer stamp duty relief has reduced considerably. This measure is designed to give younger, progressive, commercial farmers a greater opportunity to purchase land and help make the farm more competitive.
The retirement relief available on Capital Gains Tax was also restructured to encourage farmers around the normal retirement age, who have successors, to transfer their land and holdings to young, innovative, ambitious, prospective farmers. This restructuring will also encourage farmers with no successors to sell some of their land before normal retirement age. This measure will encourage an improvement in the age profile of farmers, and should ensure that farmland is put to more productive use.
There are also a variety of measures operated by my Department on an ongoing basis which encourage young persons to commit to full-time farming. These include the scheme for new entrants to dairying under the CAP Health Check, the dairy efficiency programme and the newly established Beef Technology Adoption Programme. The roll-out of the discussion groups, in particular, give beef and dairy farmers access to a range of additional management and financial skills and supports which encourage significant efficiency gains.