Written answers

Tuesday, 23 November 2010

9:00 am

Photo of Michael MoynihanMichael Moynihan (Cork North West, Fianna Fail)
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Question 122: To ask the Minister for Finance if he will clarify the capital gains tax treatment of the proceeds from the sale of shares which are an integral part of a farm (details supplied) [43606/10]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that section 598 of the Taxes Consolidation Act 1997 grants relief from Capital Gains Tax on the disposal by an individual of all or part of his or her farming assets. The relief also applies to the disposal by an individual of all or part of the shares of a company, which is both a farming company and the individual's family company. Finally, the relief is also available for certain assets owned by the individual but used by the individual's farming company.

Full relief is available where the proceeds from the disposal do not exceed €750,000. If the proceeds exceed €750,000, marginal relief may apply. In order to qualify for the relief, the individual must be at least 55 years of age and must have owned and used the assets for a period of ten years prior to the disposal or, in certain circumstances, prior to the letting of land for farming purposes. Where the disposal is of shares in a farming company, the company must have been a farming company and the individual's family company during a period of not less than ten years ending on the date of disposal. Moreover, in such cases, the individual must have been a working director of the company for a period of not less than ten years during which he/she must have been a full-time working director for not less than five years.

The relief is confined to assets used for the purpose of farming. For this reason, shares or securities or other assets held as investments are explicitly excluded from the scope of the relief. As the shares in question are not assets used for the purposes of farming, they are, accordingly, excluded from the relief and any gain on their disposal is liable to Capital Gains Tax.

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