Dáil Éireann Debate, Tuesday - 3 October 2023
230. Deputy Michael Healy-Rae asked the Minister for Finance if consideration will be given in relation to agricultural relief from capital gains tax (details supplied); and if he will make a statement on the matter. [42782/23]
View answerIt is assumed the Deputy is referring to Capital Acquisitions Tax and the Group A threshold.
For Capital Acquisitions Tax (CAT) purposes, the relationship between the person giving a gift or inheritance (i.e. the disponer) and the person who receives it (i.e. the beneficiary) determines the maximum amount, known as the “Group threshold”, below which CAT does not arise.
The Group A threshold (currently €335,000) applies, inter alia, where the beneficiary is a child (including adopted child, stepchild and certain foster children) of the disponer. The Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant such as a grandchild of the disponer. The Group C threshold (currently €16,250) applies in all other cases.
In relation to agricultural land, there are significant reliefs in place already for farm enterprises whose assets are being passed on, such as CAT agricultural relief and CGT retirement relief, CAT favourite nephew relief, and the income tax exemption on the long term leasing of farm land.
Agricultural relief allows the value of agricultural assets gifted or inherited (including farmland, buildings, stock) to be reduced by 90% of its value for the calculation of a Capital Acquisition Tax (CAT) liability. This is a valuable relief from CAT and a fundamental objective of this relief is that it is availed of by genuine, and active farmers, and that it relates to agricultural land which is being actively farmed.
Regarding CAT thresholds, while they were reduced during the economic downturn, the Government has made significant changes to the CAT thresholds in recent years. The thresholds have been increased to the extent allowable by the available resources.
In Budget 2019, the Group A threshold which applies primarily to gifts and inheritances from parents to their children was increased from €310,000 to €320,000 and again to €335,000 in Budget 2020. This increase was in response to concerns about the potential tax burden in particular on the inheritance of the family home.
You should be aware that there would be a significant cost in making further substantial changes to the CAT thresholds. Recent Revenue estimates put the full cost of increasing the CAT A threshold alone from its current €335,000 to €500,000, as suggested by the Deputy, at approximately €132 million.
The options available for providing increases to CAT thresholds must be balanced against competing demands and as part of the annual Budget and Finance Bill process.
