Dáil Éireann Debate, Tuesday - 24 January 2023
132. Deputy Michael Moynihan asked the Minister for Finance if he plans to review the current tax allowances for young farmers investing in farm facilities; and if he will make a statement on the matter. [2823/23]
View answerI understand that the Deputy's question relates to tax allowances for capital works specifically on farms, i.e. farm buildings allowances and accelerated capital allowances for the construction of slurry storage facilities. It should be noted that neither of these measures are restricted to young trained farmers as defined by the TCA.
Farm buildings allowances, provided for under section 658 of the Taxes Consolidation Act 1997 (TCA), are allowances for capital expenditure on the construction of farm buildings and other works. These allowances are made over a seven-year period to a farmer who incurs capital expenditure on the construction of farm buildings, fences, roadways, holding yards, drains, land reclamation and other works such as walls, water and electrical installation and sewerage. The expenditure must be incurred by the farmer for the trade of farming on land occupied by the farmer and so buildings or parts of buildings used as dwellings are excluded. Farm buildings allowances are usually deductible at a rate of 15% per annum over a period of six years with the final 10% deductible in the seventh year.
In addition, as introduced by Finance Act 2022, section 658A of the TCA provides for a scheme of accelerated capital allowances for the construction of slurry storage facilities. This scheme provides that 100% of the capital expenditure incurred on the construction of slurry storage facilities and associated equipment may qualify for an accelerated rate such that the allowances may be claimed over two years. Schedule 35A of the TCA sets out a table of the types and descriptions of slurry storage items which may be deemed qualifying expenditure. For reasons related to the updating of the Agricultural Block Exemption Regulation (ABER) by the European Commission, only qualifying expenditure attributable to work actually carried out in the period 1 January 2023 to 30 June 2023 in the provision of or, construction of qualifying capital items will benefit from the accelerated capital allowances. However, now that the new ABER has been implemented, the policy intention is to extend the timeframe for the relief, prior to end-June 2023, to at least 31 December 2025.
Other than the proposed extension of s. 658A TCA, I have no plans at the present time to review or amend either of these capital allowances schemes.
While there are currently no tax allowances for capital works on farms undertaken specifically by young farmers, I would note that supporting young farmers and generational renewal continues to be a priority for both the Government and the EU, and is an important part of the Common Agricultural Programme. For this reason, there are a number of existing tax reliefs which offer additional support to young trained farmers, such as the young trained farmers stock relief under section 667B of the TCA and the young trained farmer stamp duty relief under section 81AA of the Stamp Duties Consolidation Act 1999.
More generally, existing tax expenditure measures are kept under regular review by my Department as part of its on-going programme of work. Any subsequent proposals for changes to those measures would normally be addressed within the context of the annual Budget and Finance Bill process.
