Tax Code

Dáil Éireann Debate, Tuesday - 14 July 2015

Tuesday, 14 July 2015

Questions (305)

Tony McLoughlin

Question:

305. Deputy Tony McLoughlin asked the Minister for Finance in relation to the current rules involving capital gains taxation on the proceeds from compulsory purchase orders (CPO), if he will consider introducing CPO roll-over relief, similar to the farm fragmentation relief, for farmers who have been subject to a CPO because as it stands a number of farmers from County Sligo who have been subject to a CPO for the proposed N4 national route and who are under 55 years of age are not entitled to any capital gains taxation relief at present, despite the fact that they are selling their land through no choice of their own, and will now be at a loss; and if he will make a statement on the matter. [28892/15]

Written answers

Minister for Finance

When agricultural land is acquired under a compulsory purchase order (CPO), the acquiring authorities usually pay a premium over the agricultural value. The premium may cover the tax due on the disposal and the farmer may well have received the agricultural value of the land in his or her net proceeds after disposals. This means farmers are generally able to buy agricultural land of equivalent value to the land acquired under the CPO.  

The Deputy suggests a rollover relief. General rollover relief was abolished in Budget 2003. One result of rollover relief was that the Capital Gains Tax (CGT) due on an asset disposal was often never paid. While the public finances are improving, it is still the case that the yield from the various taxes, including CGT, needs to be protected.  

In my Budget 2014 speech I announced that an Agri-Taxation Review would be undertaken. The review has been carried out and the report of the Review was published in the context of Budget 2015 in October last year. The Review bore Food Harvest 2020, among other things, in mind. It sets out a strategy for agri-taxation policy for the future and concluded that the three main policy objectives are:

- Increase the mobility and the productive use of land

- Assist succession

- Complement wider agriculture policies and schemes, such as supporting environmental sustainability.

The Review made policy recommendations, taking into consideration the cost of the existing agri-taxation measures that were already in existence and the need to protect the position of the public finances. Many of the recommendations made were introduced by way of the last Budget and Finance Bill process including amendments to income tax land leasing reliefs, CGT Farm Restructuring relief and CGT retirement relief. However, the Review did not recommend change to the tax treatment of land disposed under a CPO.

The Review is available at the following link: http://www.budget.gov.ie/Budgets/2015/Documents/Agritaxation_%20Review%20_Final_web-pub.pdf  

I note the concerns of the Deputy, and of landowners who have been subject to CPO. However, for the reasons outlined, I have no plans to alter the tax treatment of land disposed under CPO.