Dáil Éireann Debate, Tuesday - 5 October 2021
194. Deputy Matt Carthy asked the Minister for Finance his proposals with regard to ensuring that those availing of agricultural relief capital acquisition tax are active farmers; and if he will make a statement on the matter. [48075/21]
View answerSection 89 of the Capital Acquisitions Tax Consolidation Act (CATCA) 2003 provides for agricultural relief which takes the form of a 90% reduction in the taxable 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”, as defined in section 89 CATCA 2003.
The definition of farmer in the legislation requires that at least 80% of the gross market value of the property to which a person is beneficially entitled in possession consists of agricultural property. In addition, following an amendment made to section 89 by Finance Act 2014, the beneficiary (or a lessee where the beneficiary leases the agricultural land) must actively farm the agricultural land on a commercial basis for at least half of his or her normal working time for a period of at least 6 years after receiving the gift or inheritance. Failure to actively farm all (or part) of the agricultural land during the 6-year qualifying period will result in a full (or partial) clawback of the relief.
The ‘active farmer’ requirement was introduced in 2014 to ensure that agricultural relief was, and is, more effectively targeted at individuals that inherit or are gifted agricultural property and actively farm it themselves on a commercial basis (or lease it on a long-term basis to active farmers), thereby ensuring the productive use of agricultural property. The requirement to actively farm the land is, therefore, already a fundamental requirement to qualify for, and to retain, agricultural relief.
As with most taxes, capital acquisitions tax operates on a self-assessment basis, subject to Revenue compliance checks and audit. I am informed by the Revenue Commissioners that, where Revenue identifies arrangements that are not in accordance with the relevant legislative requirements to qualify for a relief, it takes appropriate corrective action.
Revenue has published on its website detailed guidance on the operation of agricultural relief, which is available at: www.revenue.ie/en/tax-professionals/tdm/capital-acquisitions-tax/cat-part11.pdf
