Dáil Éireann Debate, Wednesday - 29 November 2017
104. Deputy Brendan Smith asked the Minister for Finance the taxation measures that will be applicable from 1 January 2018 for the transfer of farm land from a parent to a son or daughter under 35 years of age; if there are additional benefits for the potential beneficiary to have the green certificate; and if he will make a statement on the matter. [50810/17]
Amharc ar fhreagraI am advised by Revenue that there are two potential stamp duty reliefs where a parent transfers farm land to a son or daughter.
An exemption from stamp duty is currently available where farm land is sold or transferred to ‘young trained farmers’. These are farmers who are under 35 years of age and have (or will have within a specified period following the receipt of the farm land) specified relevant educational qualifications (known as the ‘green cert’). A ‘young trained farmer’ is required to retain ownership of the farm land for a period of five years following the transfer and to actively farm the land during this period. Section 81AA Stamp Duties Consolidation Act 1999 provides for this relief.
In addition, a relief known as ‘consanguinity relief’ applies in relation to transfers of farm land between certain blood relatives, including from parents to their children. A reduced 1% rate of stamp duty applies subject to specified conditions. The recipient of the farm land must actively farm the land for a period of at least six years or have (or will have within a specified period following the receipt of the farm land) specified relevant educational qualifications. Alternatively, the farm land can be leased for at least six years to someone who satisfies either this active farming or educational qualification condition.
Consanguinity relief currently applies where the person transferring the land is under 67 years of age. There is no age limit on the recipient of the farm land. However, Finance Bill 2017 contains measures to extend this relief for a further three years until 31 December 2020 and to remove the age limit of 67 years. Both of these measures will come into effect on the enactment of the Finance Bill which I expect to happen around the end of December.
I am also advised by Revenue that a recipient of farm land could potentially avail of ‘agricultural relief’ in relation to capital acquisitions tax. The relief takes the form of a 90% reduction in the taxable value of agricultural property that is gifted or inherited. Section 89 of the Capital Acquisitions Tax Consolidation Act (CATCA) 2003 provides for this relief.
To qualify for the relief, the recipient of the gift or inheritance (the 'beneficiary') must first qualify as a 'farmer' for the purpose of section 89 CATCA 2003. This means that a beneficiary's agricultural property must comprise at least 80% by gross market value of the beneficiary's total property at a particular date.
In addition, a beneficiary, or a lessee where the beneficiary leases the agricultural land, must actually farm the land on a commercial basis for a period of at least six years following the gift or inheritance. The relevance of a ‘green cert’ is that the holder of such a certificate, while required to actually farm the land, is not subject to the requirement that he or she spends at least 50% of his or her normal working time doing this.
The relationship between the person who provides the gift (i.e. the disponer) and the beneficiary determines the maximum tax-free threshold known as the ‘Group threshold’ below which gift or inheritance tax does not arise. Any prior gift or inheritance received by a beneficiary since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether any tax is payable on the current benefit. A son or a daughter is entitled to the Group A tax-free threshold of €310,000 for the purposes of computing the tax payable on the taxable value of any gift of agricultural property.
