Seán Ó Fearghaíl
Ceist:294 Mr. Ó Fearghaíl asked the Minister for Finance the reasons tax relief may not be availed of in instances where the lessee of land for farming is related to the landowner. [2279/04]
Amharc ar fhreagraTuesday, 27 January 2004
Ceisteanna (178)
Freagraí scríofa
Section 664 of the Taxes Consolidation Act 1997 provides for an exemption from income tax in respect of the first €5,079 of annual leasing income where the leasing is for a period of not less than five years and in respect of €7,618 where the leasing is for a period of not less than seven years. The exemptions are available to lessors of agricultural land aged 55 years or over or to those who are permanently incapacitated by mental or physical infirmity from carrying on farming.
In budget 2004, I announced that this 55 age limit is to be lowered to 40 with effect from 1 January 2004 and the amount of exempt income for leases of between five and seven years is to be increased from €5,079 to €7,500 per annum and from €7,618 to €10,000 for leases of seven or more years.
These tax exemptions apply only in respect of leases to qualifying lessees. In this context, "qualifying lessee" specifically excludes from the scope of the relief any leases made between closely connected relatives. A person is connected with an individual if that person is the individual's husband or wife, or is a relative, or the husband or wife of a relative of the individual or of the individual's husband or wife. A relative in this context is defined as meaning brother, sister, ancestor or lineal descendant. This restriction covering leasing to closely connected relatives is a standard anti-avoidance measure without which the relief would be open to manipulation with spurious arrangements being set up, such as the passing back to the lessee of rent on which tax relief had been claimed by both.
I should also point out that there are already very generous stamp duty and capital acquisitions tax reliefs available in the case of permanent transfers of land between family members, such as by gift or sale. For these reasons, I do not propose to provide an exemption from income tax from a farm land lease entered into between related persons.