Ned O'Keeffe (Cork East, Fianna Fail)
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Question 233: To ask the Minister for Finance the relevant date which is applicable to the capital gains tax where a compulsory purchase order has been served to acquire agricultural land and entry has taken place by the National Roads Authority. [12311/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that for capital gains tax, CGT, purposes, the time of disposal of land under a compulsory purchase order is the earlier of the time the authority enters on the land and the time at which the compensation is agreed. The CGT liability arises in the year of assessment (i.e. the calendar year) in which the disposal is treated as being made.

This general rule is disapplied, however, where the disposal is under a compulsory purchase order and is for the purposes of, or ancillary to, road construction, widening or extension, the person making the disposal is engaged in farming, and immediately before the disposal, the land was used for the purposes of farming.

Where these circumstances occur the CGT liability will not arise until the year of assessment in which the compensation is received.

Jack Wall (Kildare South, Labour)
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Question 234: To ask the Minister for Finance the position regarding a family who use the tenants in common method of farming which was used as a result of the death of their father and now wish to dissolve this method and equally divide the farm; the effect this will have in relation to the payment of capital gains tax and any other applicable taxes; and if he will make a statement on the matter. [12321/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am advised by the Revenue Commissioners that the partition of a tenancy in common is a disposal for capital gains tax (CGT) purposes. Each party is treated as disposing of an interest in the undivided farm in exchange for an interest in a divided part. The chargeable gains are computed by reference to the respective market values of the farm at the date the father died and on partition. A family member who is aged 55 years or more might be entitled to relief from CGT (retirement relief).

I am further advised that a liability to stamp duty or gift tax does not arise in the case of the equal division of a farm between existing co-owners on the partition of a tenancy in common.

If the family are currently farming in partnership the income tax commencement and cessation provisions might be applicable if the partnership ceases when the farm is partitioned. These could give rise to a revision of profits for tax purposes for the final years of the ceasing farming partnership while the rules for assessing a start-up business would apply to the individuals in their new roles as sole farming traders.

The Deputy should contact the Revenue Commissioners if he would like further information on this matter.