Exemption from income tax on the net rental profits arising from the lease of farmland has been available since January 1996 in certain circumstances and with defined limits. The eligibility and reliefs associated with it have been adjusted in a number of budgets since. At present, farmers must be a minimum of 40 years of age or over to be eligible for the relief. The following income exemption rates also apply. €12,000 for leases of 5 – 7 years, €15,000 for leases of 7 – 10 years, and €20,000 for leases of 10 years or more.
The objective of this measure is to provide the leasee with more security of tenure and thereby promote the proper maintenance and development of the land. Most recent figures available from Revenue are for 2009 when there were 2,747 claimants of this relief.
The Department recognises that conacre or short term rental arrangements are not a desirable basis upon which medium or long term farm business planning can be founded upon. Many commercial full time farmers require leased land to achieve the necessary scale and efficiency as purchased land is scarce and expensive. Long term leasing gives such farmers more security of tenure, allowing them to make better longer term investment and planning decisions. The continued availability of this measure is a key element of the Department’s policy around addressing the land access and mobility issues faced by farmers and I would urge both farmers and landowners who are engaged in conacre rental arrangements to carefully consider the mutual benefits of switching to a longer term leasing agreement.
The issue of possible tax incentives in Budget 2013 is a matter in the first instance for the Minister for Finance. The taxation measures announced in Budget 2012 reflected the Government’s commitment to the agri-food industry and in particular to the expansion planned in the Food Harvest 2020 strategy, and I will be engaging with the Minister for Finance again before the introduction of Budget 2013 in relation to possible taxation measures linked to policy priorities in my Department.
