asked the Minister for Finance if he will extend the £2,000 tax free allowance where land is leased to a member of the family, in particular in a case where the farmer has to lease his land due to illness having regard to the fact that at present the allowance is awarded only when said land is leased to non-family members; and if he will make a statement on the matter.
Written Answers. - Land Leasing Tax Allowance.
81.
Section 10 of the Finance Act, 1985, provides a £2,000 exemption from income tax on leasing income obtained by lessors of agricultural land who are aged 55 years or more, or who are unable to carry on farming because of a permanent mental or physical infirmity. One of the conditions attaching to the exemption is that the land must be leased by an individual who is not connected with the lessor. Thus, lettings between persons who are close relatives do not come within the scope of the exemption. The principal reason for this exclusion is to prevent tax avoidance, and the definition of closely connected relatives is the standard provision used for other income tax purposes. Failure to exclude such persons from the scheme could result in an abuse of its provisions, as otherwise overall farming income could be manipulated between the persons involved to reduce, if not eliminate, any tax liability which would otherwise arise. For these reasons, I would not be in favour of changing the current legislative provisions as suggested by the Deputy.