Peter Burke (Longford-Westmeath, Fine Gael)
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301. To ask the Minister for Finance if a person (details supplied) in County Westmeath qualifies for agricultural relief under favourite nephew; and if he will make a statement on the matter. [28262/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that there are two forms of relief from Capital Acquisitions Tax (CAT) that are relevant in the circumstances outlined by the Deputy.

The first, known as ‘agricultural relief’, may apply to reduce the taxable value of a gift or inheritance of agricultural property, including land, by 90% once certain conditions are satisfied. The second, referred to ‘favourite nephew’ (or ‘favourite niece’) relief, applies the highest Group A tax-free threshold for CAT liability, normally applied to gifts or inheritances between parents and children, to a niece or nephew in certain circumstances. Both reliefs may apply to the same gift or inheritance.

Agricultural relief

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 value of the gifted or inherited agricultural property.

To qualify for the relief, 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 at least 80% by gross market value of the beneficiary's total property at a particular date.

In addition, for gifts and inheritances taken on or after 1 January 2015, a beneficiary, or a lessee where the beneficiary leases the agricultural land, must actually farm the land on a commercial basis for a period of at least 6 years after taking the gift or inheritance. The holder of a ‘green certificate’ (of relevant education), while required to actually farm the land, is not subject to the requirement that he or she spends at least 50% of his or her normal working time doing this.

Favourite niece or nephew relief

The relationship between the person who provides the gift or inheritance (i.e. the disponer) and the beneficiary determines the threshold, known as the ‘Group threshold’, for the value of gifts or inheritances below which gift or inheritance tax does not arise. Any prior gift or inheritance received by a beneficiary since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether any tax is payable on the current benefit.

Ordinarily, a disponer’s nephew or niece is entitled to the Group B tax-free threshold of €32,500. However, a nephew or niece who has worked substantially on a full-time basis for a period of five years prior to the gift or inheritance in carrying on, or assisting in carrying on, a disponer’s trade, business or profession is entitled to the higher Group A tax-free threshold of €310,000.

The Deputy has not provided sufficient information to enable Revenue to give a definitive answer as to whether or not agricultural relief and/or ‘favourite nephew’ relief would apply in the circumstances outlined.  The uncle/nephew in question is advised to contact his local Revenue office with further information so that a definite answer can be obtained