Written answers

Tuesday, 24 May 2016

Photo of Declan BreathnachDeclan Breathnach (Louth, Fianna Fail)
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116. To ask the Minister for Finance the status of agricultural land used or leased out for the production of renewable energies in respect of capital acquisition tax in the future; and if he will make a statement on the matter. [11685/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that gifts and inheritances of agricultural property, including land, qualify for relief (known as 'agricultural relief') from the payment of Capital Acquisitions Tax (CAT) once certain conditions are satisfied. Section 89 of the Capital Acquisitions Tax Consolidation Act (CATCA) 2003 provides for 'agricultural relief'. The relief takes the form of a 90% reduction in the taxable market value of the gifted or inherited agricultural property.

The person taking the gift or inheritance (the 'beneficiary') of the agricultural property must qualify as a 'farmer' for the purpose of section 89 CATCA 2003. This means that a beneficiary's agricultural property must comprise 80% by gross market value of the beneficiary's total property at a particular date. The Revenue Commissioners take the view that land that is used for the production of renewable energy (such as solar panels) is not agricultural property for the purpose of establishing whether or not a beneficiary satisfies this '80%' test. Thus, depending on the particular proportions of both agricultural and non-agricultural property comprised in a gift or inheritance, the use of agricultural land for the production of renewable energy  may result in a beneficiary's failure to satisfy the '80%' test and to qualify for agricultural relief.

A condition for agricultural relief that applies in relation to gifts and inheritances taken on or after 1 January 2015 is that a beneficiary, or a lessee where the beneficiary leases the agricultural land, must actually farm the land for a period of at least six years after taking the gift or inheritance. As it would not generally be possible to farm any land on which equipment for the production of renewable energy is installed, the change in the use of land from farming to the production of renewable energy within the required six-year period would result in a withdrawal of some, or all, of any agricultural relief that had been granted, depending on how much of the land is diverted to this alternative use.

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