Dáil Éireann Debate, Wednesday - 29 November 2023
43. Deputy Michael Healy-Rae asked the Minister for Finance the reason are farmers debarred from benefitting from reliefs if they have solar panels on their farms (details supplied); and if he will make a statement on the matter. [52699/23]
View answerSection 89 of the Capital Acquisitions Tax Consolidation Act 2003 (CATCA 2003) provides for a relief from capital acquisitions tax (CAT) for gifts and inheritances of agricultural property where certain conditions are met. Where the relief applies, it operates by reducing the market value of qualifying assets by 90%, such that CAT is payable on the reduced value (after allowing for any unused group threshold amount).
The term agricultural property is defined in the legislation as:
• Agricultural land, pasture and woodland situate in the EU and crops, trees and underwood growing on such land;
• Farm houses, farm buildings and mansion houses which are of a character appropriate to the lands occupied with such buildings;
• Farm machinery, bloodstock and livestock on such agricultural land; and
• Entitlements to farm payments under EU Regulations now called Basic Payment Scheme/Greening Payment Scheme (BPS).
To qualify for the relief, the beneficiary of a gift or inheritance of agricultural property must qualify as a farmer, as defined in the legislation.
The legislation also requires that at least 80% of the gross market value of the property to which a person is beneficially entitled in possession on the valuation date and after taking the gift or inheritance consists of agricultural property.
In addition, 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 six years after receiving the gift or inheritance.
Finance Act 2017 amended section 89 of CATCA 2003 to allow land on which solar panels have been installed to qualify as agricultural land for the purposes of the relief subject to certain conditions. Thus, the legislation now provides that land on which solar panels have been installed will be regarded as agricultural land for the purposes of agricultural relief, and the individual will meet the active farmer test, provided the solar panels are installed on no more than 50% of the total area of the agricultural land concerned and the remaining land is actively farmed for a period of at least 6 years after receiving the gift or inheritance.
The amendment was made in recognition of the then Government’s commitment to facilitate the development of solar energy projects in Ireland and the potential role of farmland in achieving this, and to allow land leased for solar panels to be classified as qualifying agricultural activity under certain conditions.
While introducing the amendment, it was important that sight was not lost of the fundamental principle which underpins agricultural relief policy, namely to support the inter-generational transfer of family farms and to encourage succession planning. Therefore, a key aspect of this relief is to ensure that it is targeted at land which is actively farmed.
Consequently, to facilitate the above policy objectives, the amendment included a condition that in order to be classified as qualifying agricultural activity, the total area under lease for solar should not exceed 50% of the total area of agricultural land. The condition addresses any potential disincentive to leasing land for solar panels, while also preserving the integrity of this CAT relief.
