Neale Richmond (Dublin Rathdown, Fine Gael) | Oireachtas source

If it happens a third time, I do not know what will happen. Perhaps Beetlejuice will appear. This Bill introduces a new section 89A to the Capital Acquisitions Tax Consolidation Act 2003 to provide for a revised form of relief from capital acquisitions tax for gifts and inheritances of agricultural property. The primary policy rationale for the relief is, of course, to promote the intergenerational transfer of family farms. The relief will operate in a similar way to the existing relief by reducing for CAT purposes the market value of agricultural land by 90%. In order to qualify for the relief, the assets comprising the gift or inheritance must be agricultural property and a number of conditions must be met by the beneficiary, primarily that he or she qualifies as a farmer. The farmer test has two elements. It is still the case that the beneficiary must meet the assets test, which requires that at least 80% of the beneficiary's assets after taking the gift or inheritance consists of agricultural property. However, the Bill also provides for an extension to the active farmer test to the disposer of a gift or inheritance such that the disposer would now also be required to farm the agricultural property or lease it to an individual who farms the agricultural property for at least six years prior to the date of the gift or inheritance. The beneficiary will continue to be required to meet the six-year active farmer test. The purpose of this is to ensure that family farms continue to be actively farmed and to address concerns that have been raised that the relief is currently being used as a wealth transfer mechanism.

To provide a smooth transition from the old to the new rules, and to ensure taxpayers will not be unfairly excluded from the relief, the traditional arrangements will apply during the first six years of the operation of the relief. Under this transitional arrangement, the disposer will be required to have met the active farmer test only for the period following the introduction of the revised relief. The Department of Finance and Revenue will continue to monitor the operation of the existing relief under the new section once commenced. Therefore, the Minister and I do not see the benefit of the proposed report and I cannot accept the recommendation.