Paul Connaughton (Galway East, Fine Gael)
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165. To ask the Minister for Finance further to Parliamentary Question No. 358 of 4 March 2014, if the exemption for capital gains tax in relation to land which has been leased for the past five years is available in cases where land has been rented for five years; and if he will make a statement on the matter. [14800/14]

Michael Noonan (Limerick City, Fine Gael)
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I assume the question relates to whether capital gains tax retirement relief would apply to land which has been rented for 5 years under an informal letting arrangement rather than under a formal lease. In Budget 2014, I announced an extension of the capital gains tax retirement relief which was subsequently implemented in the Finance (No. 2) Act 2013. That Act amended section 598 of the Taxes Consolidation Act 1997, which grants relief in respect of a disposal of business or agricultural assets which have been owned and used for business or farming purposes for a period of at least 10 years prior to the disposal of those assets. The relief also applies to land which has been let in certain circumstances where the 10-year ownership and use test has been met immediately before the letting of the land commenced.  

The amendment retained the existing relief where the land was let at any time in the period of 15 years prior to the disposal and the disposal is to a child (within the meaning of section 599 of the Taxes Consolidation Act 1997) of the individual disposing of the land. In this connection, section 599 provides that a child includes a child of a deceased child, certain nephews and nieces and foster children in certain circumstances. The amendment in Finance (No.2) Act 2013 provides that CGT retirement relief under section 598 of the Taxes Consolidation Act 1997 applies where the land has been leased under a formal agreement to a person for the purposes of farming and each letting of that land is for a minimum period of 5 consecutive years in the period of 15 years prior to the disposal and that disposal is to a person other than a child (within the meaning of section 599 of the Taxes Consolidation Act 1997) of the individual disposing of the land.  

I am advised, therefore, that if the relevant land was rented for 5 years under an informal letting arrangement such as a conacre agreement and the disposal is to a person other than a child (within the meaning of section 599 of the Taxes Consolidation Act 1997), retirement relief would not apply.