Dáil Éireann Debate, Tuesday - 15 June 2021
350. Deputy Dara Calleary asked the Minister for Finance if he will give consideration to the reintroduction of capital gains tax exemptions in certain circumstances (details supplied); his views on whether such a scheme would benefit rural economies and assist such persons to meet financial implications of medical and care needs; and if he will make a statement on the matter. [31087/21]
View answerA number of reliefs from CGT are already in existence that are available to farmers.
Farm Restructuring Relief
Relief from CGT is available where an individual disposes of or exchanges farmland in order to consolidate an existing holding. To qualify for the relief, the first sale or purchase must occur between 1 January 2013 and 31 December 2022. The next sale or purchase must occur within 24 months of the first sale or purchase. Following an ex-post review of this relief, the relief, which was due to expire on 31 December 2019, was extended to 31 December 2022 as part of Finance Act 2019.
Retirement Relief
Business or farming assets are relieved from CGT where the person disposing of the asset(s) is aged 55 or over and both owned and used the asset(s) for the ten years prior to the disposal. While this relief is commonly referred to as Retirement Relief, it is not necessary to retire from the business or farming in order to qualify.
The operation of the relief differs between the disposal of a business or farm to a child and disposals to anyone other than to a child. The operation of the relief also differs between persons aged 55 to 65 years and persons aged 66 years and over.
From 1 January 2014 if the person is between 55 and 65 years of age and the disposal is to a child, the full relief may be claimed. If the person is 66 years of age or older the relief is restricted to €3 million.
If the child disposes of the asset within 6 years, the relief will be withdrawn and they must pay the full amount of CGT on the original disposal and the subsequent disposal.
In the case of a disposal of a business or a farm to someone other than a child, the full relief may be claimed when the market value at the time of disposal does not exceed a threshold of €750,000 if the person is under 66 years of age. The threshold is €500,000 if the person is 66 years of age and older.
These thresholds are lifetime limits and if they are exceeded the relief is withdrawn and CGT is payable on the gains on all disposals. Marginal relief may apply to gains that exceed the thresholds limiting CGT to half of the difference between the sale price or market value and the threshold.
Revised CGT Entrepreneur Relief
The revised CGT entrepreneur relief applies to an individual who disposes of qualifying assets, including shares in a qualifying company. Gains on such disposals are charged to CGT at the rate of 10%, subject to a lifetime limit of €1m.
For the relief to apply, the assets must be used for the purposes of a qualifying business carried on by the individual or the individual must own a shareholding of at least 5% in a company carrying on a qualifying business. A qualifying business is a business other than the holding of securities or other assets as investments, the holding of development land or the development orletting of land. Business assets must have been owned by the individual for a continuous period of at least 3 years in the 5-year period immediately prior to the disposal. Where the individual disposes of shares in a qualifying company, they must have held the shares for a continuous period of 3 years at any time prior to the disposal. Agricultural assets used in a qualifying business may be considered qualifying assets for the purposes of revised entrepreneur relief.
Transfer of a site to a child
An exemption from CGT is available on the transfer of a site by a parent (or both parents simultaneously) to their child and the spouse or civil partner of that child to build a house which is the child’s only or main residence. For the purposes of this exemption, a transfer includes a joint transfer by an individual, and their spouse or civil partner, to their child. The area of the site must not exceed 1 acre and the value of the site must not exceed €500,000.
All taxes are subject to ongoing review, which involves the consideration and assessment of the rate and the relevant reliefs and exemptions. Tax policy and legislation is reviewed by the Tax Strategy Group (TSG), as part of the annual Budget and Finance Bill process, and is considered in the wider tax policy context.
