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Tax Code

Dáil Éireann Debate, Tuesday - 25 September 2012

Tuesday, 25 September 2012

Ceisteanna (359)

Seamus Kirk

Ceist:

359. Deputy Seamus Kirk asked the Minister for Agriculture; Food and the Marine having regard to the targets set out in Harvest 2020, if his attention has been drawn to the disincentive if land ownership transfers to family members, under the stamp duty and gift and inheritance framework; if he has any plans to bring this matter up with the Department of Finance; and if he will make a statement on the matter. [40553/12]

Amharc ar fhreagra

Freagraí scríofa

I am aware of the importance of improving land mobility and of encouraging greater transfer of land, and of the existing challenges in this regard. In order to assist meeting the ambitious targets set out in Food Harvest 2020, new taxation measures were introduced in last year’s budget aimed at improving land mobility and farm consolidation, and encouraging transfers to younger, more progressive farmers. Two measures are of particular note in this regard;

1. Reduced stamp duty rate applying to farm transfers

2. Restructuring of Capital Gains Tax (CGT) retirement relief

1. Reduced stamp duty rate applying to farm transfers

There was a reduction in the stamp duty rate applying to the sale on agricultural land from 6% to 2%. In addition, half the rate (1%) is now applicable on transfers to close relatives until the end of 2014. This change substantially reduced the stamp duty payable on transfers of farm land by gift or by sale. The measure promotes inter-generational transfer, as the cost of lifetime transfer to transferees who do not qualify for the young trained farmer stamp duty relief has been reduced considerably.

2. Restructuring of Capital Gains Tax (CGT) retirement relief

Budget 2012 restructured the retirement relief available on Capital Gains Tax in order to incentivise the earlier transfer of farm assets to the next generation, and to encourage the sale of land by those farmers with no successors. As of 1st January 2014, for those farmers aged 66 and over, an upper limit of €3m will be introduced on family transfers, compared to an unlimited amount currently. On non-family transfers, the current upper limit of €750,000 will be reduced to €500,000. Applying the new limits from 1st January 2014 allows farmers already aged 66 and over to plan the orderly transfer of assets in advance of that date.

It is important to remember that these new measures do not mean that a farmer has to cease farming altogether beyond the age of 66, but it allows them to plan for a phased gradual transfer of assets to the next generation.

Retirement relief was restructured in order to encourage farmers around the normal retirement age, who have successors, to transfer their land and holdings to young, innovative, ambitious, prospective farmers. This measure encourages an improvement in the age profile of farmers, and should ensure that farmland is put to more productive use. It should be noted that there has been no change to the very important 90% agricultural relief on Capital Acquisitions Tax (CAT). This means that farms worth up to €2.5 million will continue to be fully exempt from CAT with regard to transfers to a child.

Questions Nos. 360 to 362, inclusive, answered with Question No. 354.
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