Paul Kehoe (Wexford, Fine Gael)
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149. To ask the Minister for Finance the rationale behind refusing the rental income tax relief for the owner of lands to their sibling or spouse’s sibling once a bona fide lease exists and rent is agreed at the current market value; his plans to alter this exemption in order that if all conditions are adhered to, apart from the relationship point, this relief could be made available; and if he will make a statement on the matter. [39387/16]

Michael Noonan (Limerick City, Fine Gael)
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Section 664 of the Taxes Consolidation Act 1997 provides relief from income tax for certain income from the long-term leasing of agricultural land. The relief is available, subject to a maximum limit, where farm land is leased to a qualifying lessee for a period of 5 years or more. In order to qualify for the purpose of the relief, the lessee must not be connected with the lessor or with any of the lessors if there is more than one. The rules for establishing whether or not persons are connected are laid down by section 10 of the Taxes Consolidation Act 1997. Effectively this means that a lessor is not entitled to relief where the land is let to family members or family members of their spouse or civil partner.

The restriction on the availability of the relief in relation to leases to closely connected relatives is a standard anti-avoidance measure without which the relief would be potentially open to abuse, for example with the passing back to the lessee of rent on which tax relief had been claimed. This would not arise on transactions made at arm's length.

I would also point out that there are reliefs from stamp duty and capital acquisitions tax available in the case of permanent transfers of land between family members, such as by gift or sale. I also introduced succession farm partnerships in Finance Act 2015, which will be commenced in early 2017, to assist succession planning and the transfer of farms between family members.