Dáil Éireann Debate, Monday - 11 September 2017
194. Deputy Jackie Cahill asked the Minister for Finance the position regarding a case in which an inheritance is used to purchase an agricultural asset (details supplied); and if he will make a statement on the matter. [38543/17]
View answerI am advised by Revenue that the tax treatment to be applied in the case supplied by the Deputy would depend on the conditions attached to the inheritance of the cash benefit, if any, by the disponer and on whether the inheritance also consisted of agricultural property.
Section 89 of the Capital Acquisitions Tax Consolidation Act (CATCA) 2003 provides for agricultural relief. The relief takes the form of a 90% reduction in the taxable market value of gifted or inherited agricultural property. To qualify for the relief, the person taking the gift or inheritance (the 'beneficiary') of the agricultural property must first qualify as a 'farmer' for the purpose of section 89 CATCA 2003. This means that a beneficiary's agricultural property must comprise at least 80% by gross market value of the beneficiary's total property at a particular date.
Section 89 allows that where an inheritance of a benefit has been made conditional on it being invested in agricultural property, then that inheritance will be considered agricultural property for the purposes of the 80% test provided the investment in agricultural property takes place within 2 years of the date of the inheritance. If the cash benefit has been bequeathed without this condition then it will not be treated as agricultural property for the purposes of the 80% test and depending on the value of any other property which would qualify as agricultural property within the same inheritance, it may affect his or her entitlement to agricultural relief.
If the cash benefit does not qualify for agricultural relief, then the inheritance is taxed in the standard way. For the purposes of CAT, the relationship between the disponer and the beneficiary determines the life-time tax-free threshold – known as the “Group threshold” – below which gift or inheritance tax does not arise. Where a person receives gifts or inheritances in excess of their relevant tax free threshold, CAT at a rate of 33% applies on the excess over the tax free threshold.
