Patrick O'Donovan (Limerick, Fine Gael)
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89. To ask the Minister for Finance his views on a matter (details supplied) regarding Capital Gains Tax; and if he will make a statement on the matter. [25484/15]

Michael Noonan (Limerick City, Fine Gael)
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Capital gains tax applies to gains in respect of land which is acquired under a compulsory purchase order (CPO). The rate of capital gains tax is currently 33%.

When agricultural land is acquired under a CPO, the acquiring authorities usually pay a premium over the agricultural value. The premium may cover the tax due on the disposal and the farmer may well have received the agricultural value of the land in his or her net proceeds after disposal. This means farmers are generally able to buy agricultural land of equivalent value to the land acquired under the CPO.

In my Budget 2014 speech I announced that an Agri-Taxation Review would be undertaken. The review has been carried out and the report of the Review was published in the context of Budget 2015 in October last year. The Review bore Food Harvest 2020, among other things, in mind. It sets out a strategy for agri-taxation policy for the future and concluded that the three main policy objectives are:

- To increase the mobility and the productive use of land

- To assist succession

- To complement wider agriculture policies and schemes, such as supporting environmental sustainability

The Review made policy recommendations taking into consideration the cost of the existing agri-taxation measures that were already in existence and the need to protect the position of the public finances. Many of the recommendations made were introduced by way of the last Budget and Finance Bill process including amendments to income tax land leasing reliefs and CGT retirement relief. However, the Review did not recommend change to the tax treatment of land disposed under a CPO.

The Review may be of interest to the Deputy and is available at the following link:

CGT retirement relief is available, among other conditions, in respect of land which has been owned and used for the purposes of farming by the individual disposing of the land for a minimum period of 10 years prior to being disposed of. In order to qualify for the relief, the individual must be aged 55 or over. In addition, retirement relief is available in respect of land which has been let by the individual disposing of that land in the period of 5 years prior to the disposal where, immediately before the time the land was first let in that 5-year period, the land was owned and used for the purposes of farming by the individual concerned for a minimum period of 10 years and the disposal is to an authority possessing compulsory purchase powers (for example, a local authority) where the disposal is made:

- for the purposes of enabling the authority to construct, widen or extend a road or part of a road, or

- for a purpose connected with or ancillary to the construction, widening or extension of a road or part of a road by the authority.

I note the Deputy s concerns as set out in the particular example in the details supplied with the question. However, for the reasons I have outlined above, I have no plans to alter the tax treatment of land disposed under CPO.