Áine Collins (Cork North West, Fine Gael)
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61. To ask the Minister for Finance if he will introduce a scheme that would encourage the sale of land (details supplied) to young productive progressive farmers. [18916/15]

Michael Noonan (Limerick City, Fine Gael)
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I am conscience of the importance of encouraging the availability of land to younger farmers, and this is an issue which was given great emphasis during last year's Agri-Taxation Review. A number of policies have been enacted or modified for this purpose in recent years, several of them emerging out of the Agri-Taxation Review. Included among these are the following:

Capital Gains Tax

Farm Restructuring Relief

The Finance Act 2013 introduced relief from capital gains tax for farm restructuring where the first transaction in the restructuring, for example, the sale, purchase or exchange of farm land, was carried out on or before 31 December 2015 and where the restructuring was completed within 24 months. The Finance Act 2014 extended this deadline to 31 December 2016. However, in order to comply with EU State aid requirements, the relief is now confined to agricultural land only it does not apply to buildings on the land. The purpose of the relief is to facilitate the consolidation of farm land, thereby ensuring the more productive use of the consolidated land holding.

Retirement Relief

Section 598 of the Taxes Consolidation Act 1997 grants CGT retirement relief to farmers in respect of, among other things, the disposal of landincluding land that has been let in certain circumstances.

In the case of land that is let, the Agri-Taxation Review recommended subject to certain conditions, that land that has been let for up to 25 years in total (increased from 15 years) ending with the disposal of that land should qualify for the relief. The Finance Act 2014 gave effect to this recommendation. The letting can be to an individual, a partnership or a company.

Since the enactment of the Finance (No. 2) Act 2013, farmers who let their land on conacre agreements were not eligible for retirement relief when the land was ultimately disposed of, except where the disposal was to a child (which includes a child of a deceased child, nephews and nieces and foster children in certain circumstances) of the person disposing of the land. The Finance Act 2014 gives farmers who let their land on conacre and who ultimately dispose of their land a once-off opportunity to avail of CGT retirement relief, provided they satisfy the other conditions of the relief, where they either:

- dispose of their land on or before 31 December 2016, or

- lease their land on or before 31 December 2016 for minimum periods of 5 years (up to a maximum of 25 years) and ultimately dispose of the land.

An overriding condition in relation to eligibility for retirement relief is that the land ultimately disposed of must have been owned and farmed by the retiring farmer for a period of not less than ten years immediately before the land is leased (or let on conacre up to 31 December 2016).  A farmer who ultimately disposes of the land to his or her child (as defined) can let the land on conacre after 31 December 2016, pending that disposal, without losing eligibility for retirement relief.  The changes outlined above are designed to encourage the long-term leasing of farm land and the transfer of that land to young, progressive farmers.

Capital Acquisitions Tax

Capital Acquisitions Tax (CAT) is the overall name for both Gift Tax and Inheritance Tax.

CAT relief is available in respect of gifts and inheritances of agricultural property, as defined in Section 89(1) Capital Acquisitions Tax Consolidation Act 2003, subject to certain conditions being satisfied.

The relief operates by reducing the value of the agricultural property by 90%.

The relief has been amended in the Finance Act 2014 to take account of the recent recommendations of the Agri-Taxation Review, designed to ensure productive use of agricultural property.

In order for a beneficiary of a gift or an inheritance to qualify for Agricultural relief on a gift or inheritance of agricultural property taken on or after 1 January 2015, the beneficiary of the gift or inheritance must farm the agricultural property on a commercial basis and with a view to the realisation of profits for a period of not less than six years or alternatively, lease the agricultural property to a lessee who will farm the agricultural property on a commercial basis.

The focus of the changes to CAT Agricultural relief in Finance Act 2014 is to target agricultural relief to active farmers and to thereby ensure that agricultural land is used productively when it is the subject of a transfer by way of either gift or inheritance.

Stamp Duty

Leasing farm land

One of the recommendations of the Agri-taxation Review intended to encourage more productive use of farm land is that stamp duty relief be given in relation to certain leases of farm land to encourage more productive use of land. This recommendation is now reflected in Section 81D of the Stamp Duties Consolidation Act 1999 which was introduced in the Finance Act 2014 and is subject to a commencement order by myself.

The section provides, subject to certain conditions, for relief from stamp duty to encourage the long-term leasing of farm land to active farmers.

The conditions that must be satisfied are:

- The term of a lease must be for a period of not less than 6 years and not more than 35 years.

- The land must be used exclusively for farming carried on by the lessee.

- The land must be farmed on a commercial basis and with a view to the realisation of profitsthus confining the relief to genuine farmers.

The lessee (be it an individual, partners or a main shareholder and working director) must also:

- have an agricultural qualification (a qualification of the kind listed in Schedule 2, 2A or 2B to the Stamp Duties Consolidation Act 1999), or farm the land for not less than 50% of his or her normal working time.

Consanguinity Relief (Paragraph 5, Schedule 1 to the Stamp Duties Consolidation Act 1999)

Conveyances and transfers of certain properties between close relatives were subject to stamp duty at one-half the normal rate of stamp duty. The reduced stamp duty was payable by the individual to whom the land is conveyed or transferred. This relief is commonly known as consanguinity relief and was due to expire in relation to instruments executed prior to 1 January 2015.

The Agri-taxation Review recommended that this stamp duty relief be extended for three more years but confined to conveyances or transfers of farm land, in order to encourage more productive use of farmland.

Between 1 January and 31 December 2015, a conveyance or transfer by a person of any age can qualify for relief. Between 1 January 2016 and before 1 January 2018, only a conveyance or transfer by a person under 67 years of age can qualify for relief. The individual to whom the land is conveyed or transferred must either farm the land or lease it for a period of not less than six years to an individual who farms the land. Revenue will accept that a lease may also be to a partnership or to a company (whose main shareholder and working director farms the land on behalf of the company). [Where land is leased to a company that is owned equally by an individual and that individual's spouse or civil partner, and at least one of them satisfies the working director and the farming requirements, the relief will apply.]

The person who farms the land (including partners or working director as appropriate) must be a farmer with an agricultural qualification (a qualification of the kind listed in Schedule 2, 2A or 2B of the Stamp Duties Consolidation Act 1999) or farm the land for not less than 50% of his or her normal working time.

The land must be farmed on a commercial basis and with a view to the realisation of profits, thus confining the relief to genuine farmers.

These various policies are designed to maximise the extent to which younger farmers have access to land. I have no immediate plans for further policies to encourage the sale of land and it would not be appropriate to speculate on the issue in advance of the Budget process.