Written answers

Tuesday, 5 October 2021

Photo of Matt CarthyMatt Carthy (Cavan-Monaghan, Sinn Fein)
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191. To ask the Minister for Finance if he plans to retain consanguinity relief in its current form for the duration of the current Government; and if he will make a statement on the matter. [48072/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Consanguinity relief provides, under certain conditions, for a 1% rate of stamp duty to be applicable where a transfer of agricultural land (by sale/purchase, exchange or gift) is made to certain close relations, such as a mother to son or uncle to niece. The standard rate of stamp duty applying to the transfer of agricultural land is 7.5%.

In line with Government policy, it is intended to both encourage and facilitate intergenerational farm transfers.

The consanguinity stamp duty relief (as set out in Schedule 1 of the Stamp Duties Consolidation Act 1999) was last extended in section 53 of Finance Act 2020. It is next due to expire at the end of 2023.

It is my view that extending such tax reliefs in three year increments provides an appropriate balance between delivering a degree of medium-term certainty in respect of the availability of a relief for those planning to avail of it, as well as for those operating it, and the need for the relief to be reviewed regularly by my Department (with the assistance of the Department of Agriculture, Food and the Marine). These regular reviews help ensure that the reliefs remain fit-for-purpose, reflect current government policy, continue to be consistent with EU state aid policy, and to allow for other considerations.

On that basis, a decision of the further extension of the consanguinity relief is expected to be taken in advance of Budget 2024/Finance Bill 2023.

Photo of Matt CarthyMatt Carthy (Cavan-Monaghan, Sinn Fein)
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192. To ask the Minister for Finance his proposals with regard to agricultural relief capital acquisition tax; and if he will make a statement on the matter. [48073/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy may be aware, the Capital Acquisitions Tax (CAT) Agricultural Relief operates by reducing the market value of 'agricultural property' (including farmland, buildings, stock) by 90%, so that gift or inheritance tax is calculated on an amount - known as the 'agricultural value' - which is substantially less than the market value.

To qualify for agricultural relief, 80% of the beneficiary’s assets, after having received the gift/inheritance, must consist of qualifying agricultural assets. The beneficiary must also be an active farmer or lease the land to one. Agricultural Relief has been available for gift and inheritance tax since the introduction of Capital Acquisitions Tax in 1976.

I believe Agricultural Relief is a vital measure to ensure the ongoing viability of family farms that pass from one generation to another and any reduction in scale of relief could have a negative impact on the development and growth of farming businesses. I also believe it is a fair and valuable relief to the beneficiaries. I have no plans to adjust Agricultural Relief at this time.

Photo of Matt CarthyMatt Carthy (Cavan-Monaghan, Sinn Fein)
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193. To ask the Minister for Finance if he has considered changing favoured successor rules with regard to agricultural relief capital acquisition tax; and if he will make a statement on the matter. [48074/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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With regard to favoured successor rules in the Capital Acquisitions Tax (CAT) regime, the Deputy should note that there is already a Favourite Nephew/Niece relief in place which allows a nephew or niece to be treated as a child for CAT purposes, subject to certain conditions. This means that they are entitled to the Group A tax-free threshold of €335,000.

The aim of this relief is to target a nephew/niece who worked for the aunt/uncle over a 5-year period prior to inheritance for a minimum number of hours per week, putting their labour and expertise at the disposal of the aunt/uncle and making a sustained contribution to the business before inheritance.

When combined with CAT Agricultural Relief, this relief is intended to support the intergenerational transfer of a family farm and is particularly important in circumstances where a farmer may not have had a direct descendant (e.g. child) to whom they may bequeath the family farm.

I believe that extending the relief to allow for the nomination of a ‘Favourite Successor Relief’ would represent a significant departure from the current CAT regime, as well as a departure from the policy rationale of the Favourite Nephew/Niece Relief.

This would most likely be followed by pressure to extend this to other reliefs (e.g. business), or more broadly for disponers to seek to nominate a ‘Favourite Successor’ for their estate.

Such a fundamental departure from the current CAT regime would lead to an erosion of the revenue base. For example, this could result in a beneficiary currently categorised as a “Stranger in blood” (Group C threshold €16,250) being entitled to the same threshold as a child of the disponer (Group A threshold €335,000).

I have no plans to change the favoured successor rules at this time.

Photo of Matt CarthyMatt Carthy (Cavan-Monaghan, Sinn Fein)
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194. To ask the Minister for Finance his proposals with regard to ensuring that those availing of agricultural relief capital acquisition tax are active farmers; and if he will make a statement on the matter. [48075/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Section 89 of the Capital Acquisitions Tax Consolidation Act (CATCA) 2003 provides for agricultural relief which takes the form of a 90% reduction in the taxable value of gifted or inherited agricultural property. To qualify for the relief, the person taking the gift or inheritance (the “beneficiary”) of the agricultural property must first qualify as a “farmer”, as defined in section 89 CATCA 2003.

The definition of farmer in the legislation requires that at least 80% of the gross market value of the property to which a person is beneficially entitled in possession consists of agricultural property. In addition, following an amendment made to section 89 by Finance Act 2014, the beneficiary (or a lessee where the beneficiary leases the agricultural land) must actively farm the agricultural land on a commercial basis for at least half of his or her normal working time for a period of at least 6 years after receiving the gift or inheritance. Failure to actively farm all (or part) of the agricultural land during the 6-year qualifying period will result in a full (or partial) clawback of the relief.

The ‘active farmer’ requirement was introduced in 2014 to ensure that agricultural relief was, and is, more effectively targeted at individuals that inherit or are gifted agricultural property and actively farm it themselves on a commercial basis (or lease it on a long-term basis to active farmers), thereby ensuring the productive use of agricultural property. The requirement to actively farm the land is, therefore, already a fundamental requirement to qualify for, and to retain, agricultural relief.

As with most taxes, capital acquisitions tax operates on a self-assessment basis, subject to Revenue compliance checks and audit. I am informed by the Revenue Commissioners that, where Revenue identifies arrangements that are not in accordance with the relevant legislative requirements to qualify for a relief, it takes appropriate corrective action.

Revenue has published on its website detailed guidance on the operation of agricultural relief, which is available at:www.revenue.ie/en/tax-professionals/tdm/capital-acquisitions-tax/cat-part11.pdf

Photo of Matt CarthyMatt Carthy (Cavan-Monaghan, Sinn Fein)
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195. To ask the Minister for Finance the number of persons that availed of enhanced stock relief for farm partnerships in each of the years 2016 to 2020 and to date in 2021; the amount availed of in €1,000 bands; the amount these farm partnerships paid in excess of €15,000 in €1,000 bands; and if he will make a statement on the matter. [48079/21]

Photo of Matt CarthyMatt Carthy (Cavan-Monaghan, Sinn Fein)
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204. To ask the Minister for Finance if he has considered extending enhanced stock relief for farm partnerships; and if he will make a statement on the matter. [48089/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 195 and 204 together.

I am advised by Revenue that data in relation to enhanced stock relief for registered farm partnerships are available on the Revenue website at

www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/costs-tax-expenditures.pdf.

The following table contains details on the tax years 2016 up to 2018, the latest year for which returns are currently available.

- 2018 2017 2016
No. of participants 210 370 360
Cost (€m) 0.3 0.6 0.5

I am further advised by Revenue that due to the small numbers of taxpayers involved and the obligation to protect taxpayer confidentiality, it is not possible for Revenue to provide the detailed breakdown by amount as requested by the Deputy.

This measure is due to sunset on 31 December 2021. As the Deputy will appreciate, matters concerning the introduction of new reliefs and the extension of existing reliefs fall to be considered by me in the context of the annual Budget and the subsequent Finance Bill. That process is underway.

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