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Coveney Announces Most Substantial Agri-Taxation Package Ever

Publication of the Agri-taxation Review

 

Budget 2015 incorporates 12 new agri-taxation measures and represents the most substantial package of this kind ever introduced in a single budget. The new measures are part of an overall package of 25 measures designed to encourage more productive use of agricultural land and are based on the report of the Agri-Taxation Review Group, published earlier today.

Minister Coveney stated, “I am pleased that the Minister for Finance and I could facilitate this joint initiative, which has given us a unique opportunity to examine a critical element of Government support to the agriculture sector in the context of the Government  strategy of expansion and increasing exports under Food Harvest 2020”.

The Minister added “The Agri-taxation Review has produced a comprehensive taxation strategy for the sector. The Government’s commitment to agriculture is evidenced by the immediate implementation of the majority of the Report’s recommendations in Budget 2015. I am confident that this package of measures will lead to a more efficient and productive sector as we look forward to the challenges and opportunities ahead. This is an exciting time for Irish agriculture and I expect the impact of these measures to be felt for a generation to come”.

The primary agriculture sector provides the raw materials that underpin the Irish food and drink industry. The Review provides a strong evidence base for continued assistance to the primary sector through taxation measures and a clear strategy with specific policy objectives for the future. There are both opportunities and challenges ahead, including the abolition of milk quotas in 2015, and the 12 new measures introduced in Budget 2015 form part of the policy response to those challenges.

To increase access to land, and the more productive use of land, Budget 2015 includes a comprehensive package of five new measures:

  • Increase the income thresholds for relief from leasing income by 50%.
  • Introduce a fourth threshold for lease periods of 15 or more years.
  • Remove the lower age threshold of 40 years of age for eligibility.
  • Allow non-connected limited companies as an eligible lessee.
  • Relieve stamp duty on long-term leases (5 years or more) for agricultural land.

 

To assist succession and the transfer of farms, Budget 2015 includes four new measures:

  • A targeting of Agricultural Relief from Capital Acquisitions Tax to qualified or full-time farmers or to those who lease land out on a long-term basis.
  • For transfers under Retirement Relief, extension of the eligible letting period of a qualifying asset to 25 years.
  • For transfers other than to a child under Retirement Relief, as a once-off measure until the end of 2016, allow conacre lettings as eligible.
  • The extension of Stamp Duty Consanguinity Relief, i.e. relief to related persons, on non-residential transfers to the end of 2017.

 

Taxation measures have a specific role to play in areas that are primarily supported through other policies, such as the CAP, and, to complement wider agriculture policies and schemes, there are three additional new measures:

  • Capital Gains Tax relief for farm restructuring now includes whole-farm replacement as eligible and the measure has been extended to the end of 2016.
  • In response to increasing income volatility, the income averaging measure has been enhanced by increasing the averaging period from 3 to 5 years.
  • The income averaging measure will also now allow averaging to be availed of where a farmer and/or their spouse are engaged in an on-farm diversification trade or profession.

 

A range of important measures have been retained, including:

  • To support investment to enhance competiveness, including assisting new entrants and young trained farmers, the current Capital Allowances and current Stock Reliefs available to the sector are retained.
  • To assist environmental sustainability, profits or gains from the commercial occupation of woodlands remain tax exempt.
  • To assist succession and the transfer of farms, Agricultural Relief from Capital Acquisitions Tax, Retirement Relief from Capital Gains Tax and the current stamp duty exemptions on transfers of land are retained.

 

The Review will form the basis of agri-taxation policy for a number of years to come. The Agri-taxation Working Group will examine additional issues identified by the Review and will continue to monitor the effectiveness of agri-taxation measures.

 

View Press Release as a PDF:  DAFMPR 148/2014 (pdf 564Kb) 

Date Released: 14 October 2014