Eamon Scanlon (Sligo-North Leitrim, Fianna Fail)

Tenancies in common and the repercussions with regard to capital gains tax affect several of my constituents. It is not uncommon for farmers at the point of succession to pass on their farms to two or more family members by way of a tenancy in common. Circumstances may change over time and joint ownership may need to be broken up for genuine reasons. There is a substantial liability to capital gains tax where such partnerships are dissolved, even if partners continue to farm a share of the original farm and the land in question is not disposed of.

In my constituency, two brothers inherited a farm from their father. He left them the farm as tenants in common in 1990. Some 17 years later the brothers have married and have families. They want to split the farm but the tenancy in common means they each own every blade of grass on the farm. They cannot split the farm and continue to farm it because the Revenue Commissioners deem this to represent each brother buying from the other. This involves a capital gains tax of €50,000 each, a penal tax which they cannot afford.

Capital gains tax is chargeable on gains arising from the disposal of assets other than any gain that arose prior to 6 April 1974. Any form of property, other than Irish currency, including an interest in property such as a lease, is an asset for capital gains tax purposes. In the case I have highlighted there is no disposal of assets. Capital gains tax should not apply.

This is an anomaly of which the IFA is aware. It affects many farms throughout the country. At a time when the farming way of life is not as common as it used to be we should try to assist our farmers. The IFA proposes that where joint ownerships of family farms are dissolved and jointly owned assets are divided and transferred to individual family owners, no chargeable gain should be subject to capital gains tax. I agree with this stance.

I ask the Minister for Finance to make provision in the budget to take account of the situation outlined. It is an unjust situation that penalises farmers trying to make an honest living and who are not trying to exploit loopholes in the tax system.

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