Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I thank the Deputies for raising this issue. This section does not refer specifically to active farmers. My amendment No. 83 deals with the concerns expressed by many Deputies, including those present, and by the farming organisations. The farming organisations and the Department of Agriculture, Food and the Marine have agreed that the terms of this amendment will meet their concerns.

The Chairman asked me to refer to the farm tax review. In the 2013 budget, I announced that we were doing a full review of the tax measures put in place over a variety of budgets to enhance and encourage farming and the agri-food business to see were they still fit for purpose. In other words, were they still achieving what was intended. The review was very good. The farming organisations co-operated fully and came up with a report in which there are four recommendations that require further discussion with the stakeholders and we will have that discussion. Commercial farmers and the farming organisations received the rest of the recommendations quite well. Those are the recommendations that made up the agri-food farming tax package in the budget and in this Bill. We were very pleased to do that.

The purpose of the policy falls into two areas. The first is to ensure that the transfer of farmland to the next generation of dynamic, energetic farmers could be achieved more easily and made more affordable to farming families. They were well received. There is an emphasis in the recommendations on leasing. If one could not get permanent transfers leasing was good option. The conacre system where one had land for only 11 months does not encourage investment. Leasing for up to 15 years and the tax benefits that go with that were enhanced.

Income averaging is another serious concern for farmers because in farming one can have a middling year, a very good year, another middling year and then maybe two bad years. How does one average income? We considered various schemes in other countries. We ended up changing the income averaging mandate that is in the tax code from three to five years. That is of significant help. One saw the beef crisis this year. I presume that following the trends in milk prices in New Zealand and on the international milk market, something similar will happen with milk over the winter but it will be short term. Averaging income and matching good years with bad years is essential to encourage farming as an industry, to make it worthwhile to be in it, and to encourage investment.

Everything was fine until the question of the definition of the active farmer came up. I examined it when Deputies brought it to my attention. Deputies on all sides of the House contacted me, formally and informally. The original definition of the active farmer was somebody who spent at least half of his time farming and the presumption was that we were talking about a 40 hour week. It is reasonable to assume that somebody could spend 20 hours farming by spending an hour after work in the evening and spending another ten at the weekends because farming is the kind of activity where, unfortunately for young farmers, a bit of Sunday work is always required, especially on dairy farms. The Deputies are very familiar with how that works. It was also a trust system. No one from the Revenue Commissioners or Teagasc was going to chase around with a watch to see whether somebody spent 20 hours on the farm. It looked reasonable. However, the farming organisations, individual Deputies and farmers are seeking additional assurance.

In addition to the 50 hours dedicated to farm work, there are three other measures, some of which we had already. The first test will be 50 hours on the farm. If one is a qualified farmer, that is, one who has been certified after pursuing one of those courses with which the Deputies are familiar, there is no hours test. It is sufficient to be a qualified farmer and have the ability to farm the land commercially. Then one qualifies for the benefits in the legislation, which includes stamp duty, capital acquisitions tax and so on. They all run on the same definitions.

The second definition was if one worked off the land, for example, if the young farmer, qualified or not, was in Dublin and leased his land to a qualified farmer, whether he qualified under the 50% rule or the qualified farmer rule, the benefits would apply as long as the lessor qualified under the active definition. The third definition meets the concerns of Deputies McGrath and Doherty. If, for example, somebody, who was off the land for several years and had no qualification leading to certification, inherited on a sudden death the kind of thing that usually happens in rural Ireland and is unable to avail of it we have introduced a measure whereby somebody can qualify in the three subsequent years.

There is a three-year window where one can qualify.

The purpose of the measures is not to raise taxes or have additional revenue. It is to put incentives in place so that farmland does not lie fallow but is used to best purpose and farmed commercially. It is an honour system in that nobody will be chasing around after people. It provides an incentive to put land in the hands of people who will farm it commercially or are qualified to do so. When we get to amendment No. 83 we can go through it again. I assume the Deputy is in a bit of a hurry this evening with all the other things he has to do. That is the position, if that satisfies his question.