Catherine Murphy (Kildare North, Independent)
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Question 116: To ask the Minister for Finance if his attention has been drawn to the fact that the average age of farmers here is high yet the agricultural colleges are fully subscribed; in view of the importance of this sector and the prospect of increasing both productivity and expertise, if he will lengthen the time for the payment of inheritance tax from one year to three years in cases in which farms transfer in these circumstances; and if he will make a statement on the matter. [28740/11]

Michael Noonan (Limerick City, Fine Gael)
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I am aware of the importance of the farming sector and of making the sector more productive. To that end, tax legislation already contains a number of reliefs and allowances which reduce the tax burden on transfers of land from one generation to another. Capital Acquisitions Tax (CAT) includes gift and inheritance tax. There are group tax free thresholds for CAT which are based on the relationship between the person who provided the gift or inheritance (known as the disponer) and the person who received the gift or inheritance (the beneficiary) below which no CAT is payable. The current thresholds are: Group A: €332,084 – applies where the beneficiary is a child (including adopted child, step-child and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child. Group B: €33,208 – applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer. Group C: €16,604 – applies in all other cases.

Tax at the rate of 25% is payable once the relevant tax-free threshold is exceeded.

Qualifying farmers can avail of agricultural relief, which reduces the value of the agricultural holding by 90% for tax purposes. In order to qualify for agricultural relief, 80% of a farmer's assets, after having received the gift or inheritance, must consist of qualifying agricultural assets. If the beneficiary does not qualify for agricultural relief by virtue of the assets test, s/he may be able to claim business property relief, which reduces the value of business property by 90%. Nephews or nieces who have worked in a family farm or business can avail of the Group A threshold in certain circumstances. The combination of the Group A tax free threshold and agricultural or business property relief means that an individual could inherit or be gifted a farm up to €3.32 m in value without incurring a CAT liability.

As well as the generous reliefs and exemptions from CAT, there is an exemption from Stamp Duty on the purchase of agricultural land by young trained farmers who have the required agricultural qualification; and a farmer aged over 55, who has worked the land for the ten years leading up to its disposal, may be able to claim retirement relief from Capital Gains Tax (CGT), which would fully relieve any CGT liability on the transfer of those assets within the family. In light of the various exemptions and reliefs outlined above, I have no plans to extend the time period for payment of inheritance tax on agricultural assets as suggested by the Deputy.