Dáil Éireann Debate, Wednesday - 15 April 2015
174. Deputy Patrick O'Donovan asked the Minister for Finance the tax implications in a case were the child of a farmer under the Young Farmer Top-Up Scheme receives entitlements by transfer from the parent; and if he will make a statement on the matter. [14769/15]
Amharc ar fhreagraI am advised that the Young Farmers scheme is part of the Basic Payments Scheme introduced in 2015 under the new measures agreed in the reform of the Common Agricultural Policy. The Basic Payment Scheme has replaced the Single Payment Scheme and payments under the scheme are liable to Income Tax. The Young Farmers Scheme also provides for an additional payment to any person who commences farming or takes over existing holdings. It is available for a maximum period of 5 years depending on the year of commencement of farming.
The correct tax treatment of transfers between a parent and child can only be determined by reference to the specific terms and conditions agreed between the parties. In the absence of this information it is not possible to give a definitive answer. However, in general, where for example a parent permits a herd number to be held in joint names with a son or daughter this will be treated as a disposal by a parent of his or her entitlements under the Basic Payments Scheme. These entitlements under the Basic Payments Scheme are a chargeable asset for Capital Gains Tax purposes. Accordingly, any chargeable gain arising on the disposal of such entitlements is ordinarily liable to Capital Gains Tax. The first €1,270 of any gain is exempt from Capital Gains Tax. Where the gain exceeds that amount, Capital Gains Tax will only be charged on the amount in excess of €1,270. The current rate of Capital Gains Tax is 33%. There may also be a Gift Tax implication arising on the transfer but there is tax free threshold of €225,000 available on transfers between a parent and son or daughter. In addition, there is an annual €3,000 exemption and should any Capital Gains Tax be payable on the transfer, the Capital Gains Tax paid is available as a credit against any Gift Tax liability arising as both the Capital Gains Tax and Gift Tax liabilities arise on the same event.
