Seymour Crawford (Cavan-Monaghan, Fine Gael)
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Question 98: To ask the Minister for Finance his views on restoring the rollover tax to farmers and property owners who are being forced to sell property under CPO for the greater good of their neighbours and the nation; his further views on whether it is fair that somebody should be forced to sell property and then be taxed on the forced sale; and if he will make a statement on the matter. [38960/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Capital Gains Tax (CGT) is a tax on a capital gain arising on the disposal of assets. A 20% rate of CGT applies on the gains arising on the disposal of assets. In Budget 2003, it was announced that no rollover relief would be allowed for any purpose on gains arising from disposals on or after 4 December 2002. Rollover relief applied when CGT rates were much higher. In effect, it was a deferral of the tax to be paid, where the proceeds of the disposal were re-invested into replacement assets. The taxation of these gains would take place following the eventual disposal of the new assets without their replacement. The abolition of this relief is in accordance with the overall taxation policy of widening the tax base in order to keep direct tax rates low.

Such reliefs made sense when CGT rates were 40% and above. As you may be aware, the rate was halved from 40% to 20% in Budget 1998. Taxing capital gains when they are realised is logical, and this change brings CGT into line with other areas.

Where compensation is received for land that is compulsorily acquired, any gains arising from the amount paid for the acquisition of the land are chargeable to tax. In other words, if there is a sum paid by a public authority for the compulsory acquisition of land, then irrespective of its components (for example disturbance, injurious affection etc.), that total sum will be the amount to be assessed for tax. The CGT due on a disposal of land under a CPO is calculated in the same way as any other disposal of land. The consideration for the disposal will be the sum received for the land.

However, in the last two Budgets various measures were introduced to assist the farming community. I announced in the 2005 Budget a new stamp duty relief which applies solely to farmland being exchanged between two farmers for the purposes of consolidating each farmer's holding. Guidelines in relation to this relief are available from the Department of Agriculture and Food. Budget 2006 extended the Young Trained Farmer Stamp Duty Relief for a further three years. I also provided for tax relief on the EU Single Farm Payment Entitlement under CGT Retirement Relief and CAT Agricultural Relief. In addition, I exempted all transfers of the Single Payment from stamp duty.