Clar­ity has been pro­vided on some im­por­tant fi­nance mea­sures for farm­ers, writes

Martin O’Sullivan

Irish Independent - Farming - - FINANCE FARMING -

THE last two weeks have been some­thing of a roller­coaster for many farm fam­i­lies in the throes of suc­ces­sion plan­ning. I can also re­port that it has been a rocky pe­riod for those who ad­vise on such mat­ters.

In many of my re­cent suc­ces­sion plan­ning con­sul­ta­tions I was asked the ques­tion as to whether there was any ur­gency as­so­ci­ated with pos­si­ble tax in­creases in the bud­get and my an­swer was, un­likely, as the trend in re­cent years was of in­creas­ing tax thresh­olds.

Un­for­tu­nately, it never oc­curred to me that the Min­is­ter would have stamp duty in the cross hairs of his ‘where can I find more cash’ gun.

Af­ter the Bud­get, my phone was hop­ping with peo­ple seek­ing con­fir­ma­tion of the news that stamp duty had gone from 1pc to 6pc.

Fol­low­ing the pub­lish­ing of the Fi­nance Bill it was hop­ping with greater vigour from peo­ple seek­ing con­fir­ma­tion it had gone from 6pc to 1pc.

Suf­fice it to say that the phone con­ver­sa­tions with the lat­ter group were far more re­laxed and en­joy­able. For a typ­i­cal farm fam­ily with a farm worth, say €800,000, where the suc­ces­sor is over 35, the stamp duty cost had gone from €8,000 to €48,000 in just one short sen­tence from Min­is­ter Dono­hoe.

Such a move would have un­done the worth­while progress achieved in re­cent years in pro­mot­ing farm suc­ces­sion.

This has had the pos­i­tive ef­fect of tilt­ing the scales to­wards there be­ing a greater num­ber of farm­ers un­der 35 than over 65.

Thank­fully the Gov­ern­ment had the good sense to re­verse the mea­sure.

Apart from the stamp duty de­ba­cle, Bud­get 2018 did not con­tain many mea­sures to im­prove or dis-im­prove the lot of farm­ers apart from some cap­i­tal tax ad­just­ments that may ben­e­fit those farm­ers who have or in­tend to lease land for so­lar en­ergy pro­duc­tion.

How­ever, in the in­ter­est of clar­ity, and God knows clar­ity has not been in over­sup­ply since the Bud­get, I will firstly deal with the stamp duty po­si­tion as it is set out in the Fi­nance Bill.


Up un­til the Bud­get the po­si­tion was that trans­fers of land by un­re­lated par­ties were sub­ject to 2pc duty if the trans­feree did not qual­ify for the ex­emp­tion avail­able to young trained farm­ers.

How­ever, for closely re­lated par­ties where the trans­feror was un­der 67 years the rate was halved to 1pc un­der a pro­vi­sion known as Con­san­guin­ity Re­lief.

The prob­lem was that Con­san­guin­ity Re­lief was due to end on De­cem­ber 31 next mean­ing that all farm trans­fers apart from those to young trained farm­ers would be sub­ject to the new 6pc rate as an­nounced in the Bud­get. Mer­ci­fully the Fi­nance Bill re­stored the spe­cial 1pc stamp duty rate on all trans­fers of farm­ing land be­tween close rel­a­tives to the end of 2020,

Cer­tain other con­di­tions must still be sat­is­fied for this re­lief to be avail­able, such as the trans­feree (or a lessee of the trans­feree) farm­ing the land for six years for at least 50pc of their nor­mal work­ing time where they do not hold an ap­pro­pri­ate agri­cul­tural qual­i­fi­ca­tion.

A change to the rules per­tain­ing to the 100pc ex­emp­tion avail­able for trans­fers of land to young trained farm­ers has also been in­cluded in the Fi­nance Bill in that in com­pli­ance EU rules the ap­pli­cant must sub­mit a busi­ness plan which has to be cer­ti­fied by Tea­gasc.


A con­cern of many farm­ers — and one that I high­lighted pre­vi­ously in this col­umn about leas­ing land to so­lar en­ergy providers — was the im­pli­ca­tions for Cap­i­tal Gains Tax and Cap­i­tal Ac­qui­si­tions Tax (CAT) in leas­ing out land for this pur­pose.

The re­al­ity was that land taken out of farm­ing and leased for so­lar en­ergy pro­duc­tion ren­dered that land in­el­i­gi­ble for Agri­cul­tural Re­lief or Re­tire­ment Re­lief.

Thank­fully, the Fi­nance Bill ad­dresses this mat­ter in that it ex­tends the def­i­ni­tion of as­sets that can ben­e­fit from CGT Re­tire­ment Re­lief and CAT Agri­cul­tural Re­lief to in­clude land that is leased on which so­lar pan­els have been in­stalled.

Re­tire­ment re­lief from CGT ap­plies when a per­son can make a tax free dis­posal to un­re­lated par­ties of cer­tain qual­i­fy­ing as­sets up to a value of €750,000.

What the Bill sets down is that the land be­ing dis­posed of will still ben­e­fit from Re­tire­ment Re­lief pro­vided the area of land on which so­lar pan­els are in­stalled does not ex­ceed 50pc of the to­tal area of land con­cerned.

The new rules will ap­ply for dis­pos­als of leased land on or af­ter Jan­uary 1, 2018.


A sim­i­lar change is be­ing in­tro­duced in re­la­tion to Agri­cul­tural Re­lief which can ap­ply in the case of Gift or In­her­i­tance Tax col­lec­tively known as Cap­i­tal Ac­qui­si­tions Tax (CAT).

Agri­cul­tural Re­lief means that when a per­son re­ceives a gift or in­her­i­tance of Agri­cul­tural Prop­erty, the mar­ket value of the prop­erty may be re­duced by 90pc for the pur­pose of de­ter­min­ing the amount of CAT to be paid.

One of the pri­mary con­di­tions of Agri­cul­tural Re­lief is that af­ter re­ceiv­ing the gift or in­her­i­tance at least 80pc of the ben­e­fi­ciary’s gross worth must com­prise agri­cul­tural prop­erty.

Up un­til now land leased for the pur­pose of so­lar en­ergy farm­ing would not qual­ify as agri­cul­tural prop­erty but this has been al­tered in the Fi­nance Bill.

Such land will re­tain its agri­cul­tural prop­erty sta­tus pro­vided that the area of the land on which so­lar pan­els are in­stalled does not ex­ceed 50pc of the to­tal area of land con­cerned.

Martin O’Sullivan is the au­thor of the ACA He is a part­ner in O’Sullivan Malone and Com­pany, ac­coun­tants and regis­tered au­di­tors;


The Fi­nance Bill pro­vides some clar­ity on land leased to so­lar panel providers

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