Farm Picture

The Minister for Finance, Michael Noonan TD, published the Finance Bill 2014 on the 23rd of October 2014 (“the Bill”). The Bill gives effect to the measures announced in Budget 2015.

The Bill includes measures which will benefit the farming community such as:

  • The Bill provides for exemption from Capital Gains Tax on any chargeable gains arising from a disposal by farmers of the single payment entitlement for all of those entitlements which were fully leased out and where the owners, because of the change in CAP regulations, were advised by the Department of Agriculture to transfer their entitlements to an active farmer by 15 May 2014.
  • Capital Gains Tax Retirement Relief is available to farmers on the disposal of land that has been leased in certain circumstances. Land that has been leased for up to 25 years ending with disposal will qualify for the relief.

In the case of lands disposed outside the family and which land is currently let under conacre agreements which end with disposal by 31 December 2016 or which is instead leased out for minimum periods of 5 years to a maximum of 25 years ending with disposal will, subject to other conditions, also qualify for Capital Gains Tax Retirement Relief.

  • Capital Acquisition Tax relief is available in respect of gifts and inheritances of agricultural property including land, subject to certain conditions. From the 1st of January 2015 and subject to other conditions, the relief will be available in respect of agricultural property gifted to or inherited by active farmers or to individuals who are not active farmers but who lease out the property on a long term basis for agricultural use to such farmers.

Agricultural Relief has been maintained at 90% for active farmers and for individuals who are not active farmers but who lease out the property on a long-term basis to an active farmer.

  • Consanguinity Relief, which applies to transfers of non-residential property to certain relatives, was due to expire on 31 December 2014. However it has been extended for a period of 3 years (to the end of 2017) in certain circumstances where the transferee is an active farmer.

This Relief halves the rate of stamp duty payable form 2% to 1%.

  • In relation to VAT, farmer’s flat rate addition is being increased from 5% to 5.2%. The rationale behind the flat rate scheme is to compensate unregistered farmers for VAT incurred on their farming inputs and will compensate unregistered farmers for not being entitled to reclaim VAT incurred on their costs.
  • The 80% Windfall Tax on certain land re-zoning and certain sales of rezoned land has been abolished. The normal rates of income tax, corporation tax and capital gains tax will apply to such profits.
  • A lease of land, for a term not less than five years, which is used solely for farming purposes on a commercial basis will be exempt from Stamp Duty.

The above are measure which will no doubt be welcomed by the farming and agricultural community as they enable additional land to be made available to young and active farmers who want to expand following the elimination of the milk quota system which is to be introduced next year.

Most of the provisions of the Bill will come into effect on 01st January 2015.

Breda Sheahan is a trainee solicitor in the Commercial Department of FitzGerald Solicitors. FitzGerald Solicitors are located in 6 Lapps Quay, Cork.

Please note that you should contact your Solicitor for specific legal advice tailored to your needs as each case is different and the foregoing article is not intended to provide legal advice.

 

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