Dáil Éireann Debate, Tuesday - 18 October 2016
186. Deputy Peter Burke asked the Minister for Finance if he will consider introducing roll over tax relief to be given to persons who are subject to land purchase orders where the proceeds are used to replenish their agricultural holdings. [30540/16]
Amharc ar fhreagraCapital gains tax (CGT) roll over relief was abolished in Budget 2003 in respect of business assets disposed of on or after 4 December 2002, which disposals included lands disposed of by virtue of compulsory purchase orders.
One result of roll-over relief was that the CGT due on an asset disposal was often never paid. While the public finances are improving, it is still the case that the yield from the various taxes, including CGT, needs to be protected.
It is also likely to be the case that where agricultural land is acquired under a compulsory purchase order, the acquiring authorities usually pay a premium over the agricultural value. The premium may well cover the tax due on the disposal and the farmer may well have received the agricultural value of the land in his or her net proceeds after the disposal. This means that farmers are likely to be able to purchase agricultural land of equivalent value to the land acquired under the compulsory purchase order.
An Agri-Taxation review was published in October 2014 in the context of Bud get 2015. It's objective was to maximise the benefits for the farming sector and the wider economy of the existing level of State support through the tax system. The Review set out a strategy for agri-taxation policy for the future and concluded that the three main policy objectives would be:
1. Increase the mobility and productive use of land
2. Assist succession
3. complement wider agricultural policies and schemes, such as supporting environmental sustainability
The Review made policy recommendations, taking into consideration the cost of the existing Agri-taxation measures that were already in existence and the need to protect the position of the public finances. Many of the Review's recommendations have been included in Budget 2015 and subsequent Budgets. However, the Review did not recommend change to the tax treatment of land disposed under a Compulsory Purchase Order (CPO).
I did, however, announce in my Budget 2016 speech the introduction of a revised CGT entrepreneur relief from 1 January 2016 under which a lower 20% rate of CGT will apply to chargeable gains arising on the disposal of an individual's qualifying assets (up to a lifetime limit of €1 million). Last week, in my Budget 2017 speech, I announced that the applicable CGT rate will be further lowered to 10%, effective from 1 January 2017. The revised CGT entrepreneur relief applies to disposals of qualifying business assets by farmers, among others.
I am aware of concerns that have been expressed regarding the lack of roll-over relief on the part of and on behalf of landowners who have been subject to CPO. However, for the reasons outlined, I have no plans to introduce CGT roll-over relief in respect of gains on land disposed of under a CPO.
