Tony McLoughlin (Sligo-North Leitrim, Fine Gael)
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328. To ask the Minister for Finance further to Question No. 347 of 20 October 2015, and to the contents of the Finance Bill 2016 published on 22 October 2015, if he will outline the conditions that farmers whose land will be compulsorily acquired must meet to qualify for the 13% relief on capital gains tax; and if he will make a statement on the matter. [38121/15]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that gains in respect of land acquired by way of compulsory purchase order are chargeable to capital gains tax (CGT) at the rate of 33%.

However, as I previously advised, a revised relief for entrepreneurs has been introduced in section 33 of Finance Bill 2015, which was published on 22 October.  The revised relief provides that a reduced rate of CGT of 20% will apply in respect of chargeable gains on disposals of chargeable business assets made by an individual on or after 1 January 2016 up to a lifetime limit of €1 million.

On the basis of the Finance Bill provision as published, a farmer whose land has been compulsorily acquired will qualify for the reduced rate relief of 20% if the following conditions are met:

1. The compensation payment under the compulsory purchase order is received on or after 1 January 2016;

2. The land in question was owned by the individual for a minimum period of 3 years prior to the compulsory acquisition; and

3. The land in question was used by the individual for the purposes of a farming business prior to the compulsory acquisition.

It should be noted that the reduced rate of 20% will apply only to the first €1 million of chargeable gains accruing to the individual on the disposal of chargeable business assets on or after 1 January 2016.