Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

Deputy Michael McGrath has proposed that I prepare a report within six months of the passing of this Finance Bill on the possible extension of the capital gains tax relief for farm restructuring to stamp duty. He stated on Committee Stage that, while he had framed his amendment in the form of a report, he hoped there could be a Report Stage amendment that would put into effect a stamp duty relief.

This matter of a stamp duty relief for farm consolidation was also raised by Deputies Fitzmaurice and Mattie McGrath on Committee Stage where I indicated my intention to bring forward an amendment on Report Stage. At the time, I was not in a position to give a commitment as to the form that relief might take.

I have since examined the matter and am guided in bringing forward my amendment by a previous stamp duty relief that applied and by the capital gains tax relief that currently applies.

My amendment will allow a farmer to claim relief from stamp duty where he or she both sells and purchases land for the purposes of consolidating an existing farm holding. For the relief to operate, there must be both a sale and a purchase of land within a period of 24 months. Where other qualifying conditions are satisfied, stamp duty will be paid only to the extent that the value of the land that is purchased exceeds the value of the land that is sold. A reduced rate of 1% will be charged on the excess, if any, of the purchase value. If the sale takes place before the purchase, relief will be given at the time of purchase. However, if the purchase takes place first, stamp duty will have to be paid but can subsequently be refunded when the sale takes place.

When the stamp duty relief previously applied, a maximum period of 18 months was allowed between a purchase and a sale. I am increasing this period to 24 months in line with the capital gains tax relief. The rate of stamp duty that previously applied in relation to the relief was the standard rate. The standard rate is now 6% but I have decided to apply a lower rate of 1%.

A number of qualifying conditions must be satisfied before the relief can apply. The most important condition is that Teagasc must issue a certificate stating that a sale and purchase or an exchange of farmland was made for farm consolidation purposes. This is the certificate that is currently required in relation to the capital gains tax relief. The criteria to be used by Teagasc for this purpose and the information to be supplied to Teagasc are contained in guidelines published by the Minister for Agriculture, Food and the Marine.

A purchaser of farmland must retain ownership of the farmland for a period of five years and must use the land for farming. Where any part of the land is disposed of before the end of this five-year holding period, the stamp duty relieved can be subsequently recovered by Revenue, or partly recovered as appropriate. The relief will apply in relation to instruments conveying or transferring land that are executed on or after 1 January 2018 and on or before 31 December 2020. Because I will need to seek state aid approval for this relief from the EU Commission, I have to make the commencement of the new provisions subject to a Ministerial Order which will be made when such approval is obtained.

I trust that my proposed amendment will address the concerns that motivated Deputy Michael McGrath to propose his own amendment. In view of the nature of my amendment, I do not propose to accept his amendment and agree to the preparation of a report on a stamp duty relief for farm restructuring.

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