Paul Kehoe (Wexford, Fine Gael)
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Question 218: To ask the Tánaiste and Minister for Finance if he has plans to ease the burden on farmers in the farm retirement scheme who lease their holdings to relatives and are not able to avail of the tax exemption associated with a qualifying lease that could be entered into with a non-relative, entitling them to a €20,000 exemption for a lease of 10 years or more; and if he will make a statement on the matter. [20141/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Under Section 664 of the Taxes Consolidation Act, 1997, there is an exemption from income tax on leasing of land in respect of the first €12,000 of annual leasing income where the leasing is for a period of not less than 5 years, in respect of €15,000 where the leasing is for a period of not less than 7 years and in respect of €20,000 where the leasing is for a period of not less than 10 years. The exemptions are available to lessors of agricultural land aged 40 years or over or to those who are permanently incapacitated by mental or physical infirmity from carrying on farming.

These tax exemptions apply only in respect of leases to qualifying lessees. In this context, "qualifying lessee" specifically excludes from the scope of the relief any leases made between closely connected relatives. A person is connected with an individual if that person is the individual's husband or wife, or is a relative, or the husband or wife of a relative of the individual or of the individual's husband or wife. A relative in this context is defined as meaning brother, sister, ancestor or lineal descendant.

This restriction covering leasing to closely connected relatives is a standard anti-avoidance measure and such measures are common throughout the tax code. It should also be noted that there are already very generous stamp duty and capital acquisitions tax reliefs available in the case of permanent transfers of land between family members, such as by gift or sale.