Carol Nolan (Laois-Offaly, Independent)
Link to this: Individually | In context | Oireachtas source

202. To ask the Minister for Finance how he intends to apply the test on the person transferring the land within the context of the agriculture relief changes announced in Budget 2025; and if he will make a statement on the matter. [41370/24]

Jack Chambers (Dublin West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Sections 100 and 101 of the Finance Bill 2024 (as initiated) provide for the introduction of a revised form of relief from Capital Acquisitions Tax (CAT) for gifts and inheritances of agricultural property where certain conditions are met.

Subject to the enactment of these provisions in the Bill, the revised agricultural relief will be provided for in a new section 89A of the Capital Acquisitions Tax Consolidation Act (CATCA) 2003 and will apply to gifts and inheritances of agricultural property taken on or after 1 January 2025. It will replace the existing agricultural relief that is provided for in section 89 of the CATCA 2003, which will cease to apply from that date.

The revised agricultural relief, while similar in many respects to the existing agricultural relief, differs in certain respects.

A key change is the proposed introduction of two additional qualifying conditions, which relate to the ownership and use of the agricultural property prior to the date of the gift or inheritance. The first is that the person from whom the beneficiary takes the gift or inheritance (the “disponer”) must have owned the agricultural property for a minimum period of 6 years prior to the date of the gift or inheritance. The second is that the agricultural property must have been actively farmed by the disponer or a person to whom the property was leased in the 6 years prior to the date of the gift or inheritance.

The beneficiary of the gift or inheritance will be expected to retain appropriate evidence confirming that these qualifying conditions have been met.

The revised relief also introduces greater flexibility in how a disponer, or beneficiary as the case may be, satisfies the “active farmer” requirement. Section 89A will provide that this requirement may be met where part of the agricultural property is actively farmed and the remaining part is leased to an active farmer. Currently, where agricultural land is leased, it must amount to “substantially the whole” of the agricultural land owned by the farmer. Revenue accepts that substantially the whole of the property means at least 75% of the property by value. The revised relief facilitates more flexible use of the land by enabling a disponer or beneficiary to use a combination of personal active farming and leasing to an active farmer in their chosen proportion, once all of the agricultural property is used for the purposes of farming.

To ensure that the introduction of this new requirement does not have an adverse impact on existing family farm arrangements, section 100 of the Bill includes a transitional provision. This transitional provision applies for land held by the disponer before 1 January 2025, the period during which the new requirement must have been met will commence on 1 January 2025 and end on the date the gift or inheritance is taken. For example, where agricultural property is gifted on 1 March 2025, the disponer must meet the new active year conditions for the period 1 January 2025 to 1 March 2025 i.e., 2 months and as long as the disponer owned the relevant land before 1 January 2025 the disponer will be considered to have met the six year holding requirement.

I am advised by Revenue that they will publish detailed guidance, including examples, setting out how the revised agricultural relief will be applied in practice, once the Bill has been enacted.