Dáil Éireann Debate, Thursday - 14 July 2016
68. Deputy Paul Kehoe asked the Minister for Finance if the Revenue Commissioners will permit a person (details supplied) to transfer one acre of land without triggering a clawback; and if he will make a statement on the matter. [21802/16]
View answerI understand from the Deputy that this question relates to the clawback of relief from Capital Acquisitions Tax (CAT) that applies to certain gifts and inheritances of agricultural property. I am advised by the Revenue Commissioners that this relief, known as "agricultural relief" is provided for in Section 89 of the Capital Acquisitions Tax Consolidation Act (CATCA) 2003. The relief takes the form of a 90% reduction in the taxable market value of the gifted or inherited agricultural property where certain conditions are satisfied. The key conditions are that the person receiving the gift or inheritance is a farmer and continues to use the property for farming purposes.
For gifts or inheritances taken prior to 1 January 2015 agricultural relief is clawed back where there is a disposal of all or part of the agricultural property within 6 years of the date of the gift or inheritance. A clawback will not arise, however, if the disposal is by way of a gift or if the proceeds of the disposal are reinvested in other agricultural property within one year of the sale. The extent of any clawback depends on the amount of the proceeds from the disposal that are not appropriately reinvested. If the full proceeds are so reinvested there is no clawback of relief; if only part of the proceeds are so reinvested, there is a partial clawback of the relief.
From the information supplied it would appear that a clawback of agricultural relief may not apply to the proposed transfer, even if made within the 6 year clawback period, in certain circumstances. These circumstances are if the nephew disposes of the land by way of sale to his son at an "arms length" price and re-invests the full proceeds of that sale in replacement agricultural property or if he disposes of it by way of a gift to his son.
In this latter case, the son may be liable to CAT if the value of the gift, when aggregated with all other gifts and inheritances from a parent since 5 December 1991, exceeds the current relevant exemption threshold of €280,000.
