Olwyn Enright (Laois-Offaly, Fine Gael)
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Question 57: To ask the Tánaiste and Minister for Finance his views on making changes to the capital gains tax liability in situations where joint ownerships of family farms are dissolved and the jointly owned assets are divided to the individual family owners; and if he will make a statement on the matter. [27879/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Section 30 of the Taxes Consolidation Act 1997 deals with the treatment, for capital gains tax (CGT) purposes, of partnerships. It provides that, in the case of a business partnership, chargeable gains accruing to the partners on the disposal of partnership assets are assessed and charged on them separately and not on the partnership itself. In this case, the dissolution of a business partnerships might involve three forms of asset disposal, two of which incur a CGT liability. An asset that was brought into a partnership by a particular partner and is subsequently taken back by that same partner is not considered a disposal for CGT purposes and, as such, no CGT liability arises.

Where an asset was brought into a partnership by one partner and is subsequently disposed of to a different partner, the disposal is treated as a disposal from the partner who originally contributed the asset to the partner that subsequently receives the asset. In this case, the partner who contributed the asset is liable to CGT on any gain in its value. The third form of asset disposal which might arise on the dissolution of a business partnership relates to assets acquired by the partnership which are subsequently disposed of to its partners. In this situation, the assets concerned are taxable and the liability to tax is apportioned according to the apportioning of the assets between the partners concerned.

Relief from CGT is available for persons aged 55 or over who are retiring from farming where the assets being disposed of have been owned and used for ten years prior to disposal. Relief in this case is available on assets up to the value of €750,000. Where such assets are disposed of to a child of the individual, who undertakes to continue to run the business or farm, there is no limit to the value of assets that may be claimed under this relief.

Olwyn Enright (Laois-Offaly, Fine Gael)
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Question 58: To ask the Tánaiste and Minister for Finance his views on directing the new Commission on Taxation to examine the equity issue in relation to personal tax credits for farmers and other self employed sole traders; and if he will make a statement on the matter. [27880/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I will be bringing proposals to Government in the near future on matters relating to the establishment of the proposed Commission on Taxation including its membership and terms of reference. The Commission will be specifically charged with considering and making recommendations on the following:

examine the balance achieved between taxes collected on income, capital and spending and report on it;

review all tax expenditures with a view to recommending the discontinuation of those that are unjustifiable on cost/benefit grounds;

consider options for the future financing of local government;

in the context of maintaining a strong economy, investigate fiscal measures to protect and enhance the environment including the introduction of a carbon tax.

Pending consideration by the Government of these proposals, I am not in a position to elaborate further on matters pertaining to the Commission. In relation to the different tax treatment of farmers and other self-employed vis-À-vis PAYE workers, the PAYE allowance was introduced in 1980 to improve the tax progression of PAYE taxpayers and to take account of the fact that the self-employed generally then had the advantage of paying tax on a preceding year basis. The argument was also made at the time that the general scheme of allowances discriminated against employees and in favour of other taxpayers.

There have been changes since 1980 — the self-employed now pay tax on a current year basis, for example. However, the PAYE allowance has become a tax credit. Moreover, given that there can be significant timing advantages in the payment of tax for the self employed, the employee credit is still perceived as necessary to ensure a balance in the system.

Olwyn Enright (Laois-Offaly, Fine Gael)
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Question 59: To ask the Tánaiste and Minister for Finance his views on increases in stamp duty rate bands for farm land to take account of inflation in values over the past five years; and if he will make a statement on the matter. [27881/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Stamp duty is a significant source of revenue for the Exchequer, raising over €3.6bn in 2006. For the first nine months of 2007 stamp duty yield has exceeded €2.9bn. This helps to fund public services and to broaden the tax base, while keeping the direct tax burden low thereby facilitating continued economic success. Any change made to the stamp duty code would need to reflect this position.

The stamp duty code provides for one set of bands and rates for all non-residential property. Introducing special rates and thresholds specifically in respect of farmland would not only complicate what is a concise and simple tax, but would also lead to calls for special treatment from other interested sectors, thereby leading to a greater loss of Exchequer revenues and further complicating the non-residential stamp duty code.

The stamp duty code already provides relief for farmers in a number of respects, including relief for young trained farmers; consanguinity relief, farm consolidation relief and family farm transfers.

Olwyn Enright (Laois-Offaly, Fine Gael)
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Question 60: To ask the Tánaiste and Minister for Finance his views on a targeted CGT farm consolidation relief whereby the proceeds from the sale of farmland by farmers can be used to acquire other land for the purpose of farm consolidation without charges to capital gains tax; and if he will make a statement on the matter. [27882/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy's proposal is a form of re-introduction of rollover relief. It was announced in the 2003 Budget that no rollover relief would be allowed for any purpose on gains arising from disposals on or after 4 December 2002. This relief was introduced when CGT rates were much higher than current levels. The abolition of this relief was in accordance with the overall taxation policy of widening the tax base in order to keep direct tax rates low.

As the Deputy will be aware, there is already in place a generous package of reliefs that continue to be available exclusively to the farming sector.

Olwyn Enright (Laois-Offaly, Fine Gael)
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Question 61: To ask the Tánaiste and Minister for Finance his views on treating the diversification fund as capital rather than income; if he will clarify that the capital receipt is not arising from the disposal of an asset; and if he will make a statement on the matter. [27883/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The tax treatment of diversification aid payments to former sugar beet growers is a matter for the Revenue Commissioners. I am informed by the Commissioners that, based on the information available to them on the current proposals for the payment of such aid, the payments are regarded as income and will be subject to income tax. The payments are not, therefore, regarded as a capital receipt and the issue of whether an asset disposal takes place does not affect their tax treatment.

Niall Collins (Limerick West, Fianna Fail)
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Question 62: To ask the Tánaiste and Minister for Finance the reliefs and allowances available to persons (details supplied). [27908/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I would draw to the Deputy's attention that the transfer of farmland can incur liability to tax under three separate headings, namely: stamp duty, capital gains tax (CGT) and capital acquisitions tax (CAT). CGT is payable by the person disposing of the land while CAT and stamp duty are payable by the person receiving the land. However, there are a number of generous reliefs and allowances to reduce the tax burden of farmers transferring farmland to the younger generation.

In relation to CGT, where an asset is disposed of, the chargeable gain is taxable at 20%. However, where a person is retiring from farming, there is a special relief in place to reduce the burden of CGT where the person is aged 55 or over and is disposing of land that has been owned and farmed for 10 years. The Finance Act 2007 introduced a provision to extend the relief in certain circumstances where the farmland had been leased prior to disposal. For disposals made on or after 2 April 2007, retirement relief applies where:

the land is let for a period of no more than 15 years, and

immediately before the time the land was first let in that 15-year period, the land was owned and used by the individual for the purposes of farming for a period of not less than 10 years ending with the time the land was first let, and

the disposal is to a child of the individual making the disposal (which includes a child of a deceased child).

Where the land is transferred to a child who will continue to farm the land for 6 years, there is no limit to the amount of relief that applies — otherwise, the relief is restricted to assets valued at up to €750,000. A child in this case also includes the child of a deceased child.

If the person covered by the Deputy's Question has been farming the land or had been farming the land prior to it being leased, she may qualify for retirement relief on the full value of the land being transferred.

With regard to CAT, a farmer who receives farmland by way of gift or inheritance is liable to CAT at 20%. However, qualifying farmers can avail of CAT Agricultural Relief which reduces liability to CAT by 90%. In order to qualify for Agricultural Relief, 80% of a farmer's assets, after having received the gift, must consist of qualifying agricultural assets. Although off-farm principal private residences are not considered agricultural assets for the purposes of the relief, the Finance Act 2007 provided that a farmer can off-set borrowings on an off-farm principal private residence against the property's value, for the purpose of the 80% test.

In conjunction with CAT agricultural relief, the CAT code includes group thresholds, below which no CAT is liable. The indexed group thresholds applying to a gift to a grand child for 2007 is €49,682 (Group B). Any other gifts/inheritance that might have been received within the same group by an individual since 5 December 1991 are also taken into account when applying the thresholds for the purposes of calculating CAT. If the total value of all inheritances and gifts received since this date is above the relevant threshold, then a 20% CAT will apply on the difference. In this respect, in the scenario outlined in the Deputy's Question, by utilising agricultural relief in conjunction with the group thresholds, each grandson could qualify for relief from CAT on farmland to the value of €496,824.

In the case of stamp duty, this is liable on the conveyance of any property by the person receiving the property. The transfer of farmland is liable to stamp duty at the rates applicable to non-residential property. However, there is an exemption from stamp duty for qualified young trained farmers receiving farming assets who declare that they will remain in farming. Farmers aged under 35 who have a specific agricultural qualification may apply for this relief. The Finance Act 2007 made changes to the relief to provide that the Advanced Certificate in Agriculture is the new minimum education standard for the relief and the refund procedures were revised to enable young farmers who receive land to undertake agricultural training following the transfer of land and claim a refund of stamp duty after achieving the relevant qualification.

From the details supplied with the Question, the two grandsons are of sufficient age to undertake agricultural training before or after receiving the land in question which would qualify for a stamp duty exemption or refund as necessary. However, where they choose not to use the young trained farmer relief, they would qualify for consanguinity relief, which applies to transfers of land between certain blood relatives, such as between a parent and child. This reduces the rate of stamp duty to one-half of the rate which would otherwise apply.

Leo Varadkar (Dublin West, Fine Gael)
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Question 63: To ask the Tánaiste and Minister for Finance the tax incentives that are in place to encourage people to donate money to charity; and if this may include contributions to educational institutions or the establishment of a charitable board or body to carry out a specific project such as the building of a library, sports facility or community building. [27968/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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A scheme of tax relief is available under section 848A of the Taxes Consolidation Act 1997 for donations to approved bodies, including eligible charities.

The list of approved bodies is set out in Schedule 26A of the Taxes Consolidation Act 1997 and includes eligible charities, schools, colleges and universities, bodies approved for education in the arts as well as a number of other specified organisations. Bodies such as libraries and community centres may also qualify by reason of being eligible charities. To qualify for tax relief under the terms of the scheme, the minimum donation in any single year that must be made to any one eligible charity or approved body is €250. There is no maximum qualifying donation amount but:

where there is an association between the donor and the eligible charity or approved body at the time the donation is made, the relief will be restricted to 10% of the total income of the individual for the relevant year of assessment; and

an overall restriction applies to the use of tax relief schemes by certain high-income individuals, as introduced by Section 17 of the Finance Act 2006.

The precise arrangements for allowing tax relief on donations, which is allowed at the taxpayer's marginal rate, varies depending on whether the donor is a PAYE taxpayer, a person who is subject to self assessment or a company. For a PAYE donor, the relief is given on a "grossed up" basis to the eligible charity or approved body, as the case may be, rather than by way of a separate claim to tax relief by the donor. Donors give their PPSN information to the eligible charity or approved body. The claim for refund is made by the charity/body and payment is made directly to them.

In the case of a self-assessed donor, that individual claims the relief as part of his/her annual tax return and there is no grossing up arrangement. In the case of a company, it will claim a deduction for the donation as if it were a trading expense. A full list of all individual bodies approved for the purpose of the Donation Scheme as well as the terms and conditions of the scheme and the relevant forms are available on the Revenue website at www.revenue.ie.

Finally, I would point out that a separate scheme of tax relief for donations to certain sports bodies for the funding of capital projects is available under section 847A of the Taxes Consolidation Act 1997. To be eligible for this relief, the project must be approved by the Minister for Arts, Sport and Tourism.

Leo Varadkar (Dublin West, Fine Gael)
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Question 64: To ask the Tánaiste and Minister for Finance if there is tax relief or exemption in place for bequests made in the will of a deceased person; and if he will make a statement on the matter. [27969/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I assume the Deputy is referring to reliefs available under the inheritance tax code.

For the purposes of capital acquisitions tax (gift and inheritance tax), the relationship between the person who provided the gift or inheritance (the disponer) and the person who received the gift or inheritance (the beneficiary), determines the maximum tax-free threshold known as the "Group threshold". There are three Group thresholds based on the relationship of the beneficiary to the disponer and these Group thresholds are indexed annually by reference to the Consumer Price Index.

The indexed Group thresholds for 2007 are as follows:

Group A: €496,824. This applies to gifts and inheritances received by a child, a step-child and a foster child from a parent. Group A also applies in certain circumstances to inheritances received by a parent from a child and by a grand-child from a grand-parent.

Group B: €49,682. This applies to gifts and inheritances received by brothers, sisters, nephews, nieces and grand-children

Group C: €24,841. This applies to gifts and inheritances received by a beneficiary who does not come under Group A or B.

Any other gifts and inheritances that might have been received by the beneficiary from within the same Group since 5 December 1991 are taken into account when applying the threshold for the purposes of calculating tax. If the total value of all gifts and inheritances received by the beneficiary since this date from within the same Group does not exceed the Group threshold, no Gift or Inheritance Tax will apply. If the Group threshold is exceeded, then a 20% rate of gift/inheritance tax will apply on the excess only over the threshold figure.

Apart from the tax-free Group thresholds available to a beneficiary, the Capital Acquisitions Tax code exempts certain gifts and inheritances completely from tax and also contains relieving provisions. The following are the main exemptions from gift and inheritance tax:

A gift or inheritance received from a spouse.

A gift or inheritance received for public or charitable purposes

A gift or inheritance of a dwelling house in certain circumstances

The first €3,000 of all gifts taken from each disponer in any one calendar year

Separately, where a gift or inheritance consists of agricultural or business property, the value of the agricultural or business property may be reduced by 90% for tax purposes provided certain conditions are met.

I have been informed by the Revenue Commissioners that if the Deputy requires specific information on any of the exemptions or reliefs available in relation to gift and inheritance tax, he can contact the Revenue Commissioners Stamping District in Dublin Castle on 6475000 who will provide the information required.