Family partnership incentives the big ticket for farmers in Coalition drive
Published 14/10/2015 | 02:30
"Farmers are going to love this, and it may well cost more than the €10m we've budgeted," was how the Minister for Agriculture, Simon Coveney, described the latest tax incentive to get farms into the hands of younger farmers.
With the average age of farmers remaining stubbornly high at 55 years, the Government centred the biggest give-away in the agri sector on measures designed to tackle the aging demographic of the farming population.
"Not long ago, I was being asked how many agricultural colleges were going to close. Now we've got more young farmers in ag colleges than ever before, and I'm under pressure to find enough staff to cope," Mr Coveney said at a Budget briefing yesterday.
"They are going to be better educated than ever, and we need to make sure that generation isn't disappointed."
The family transfer partnership was first mooted in the recent Agri-taxation Review, which noted that financial security concerns for farming couples was often slowing the rate of transfer of farms to the next generation.
Now a mother or father will be able to set up a profit-sharing deal with their children, nephew or niece where at least 80pc of the farm transfers to the younger farmer by the end of the agreement, which must be between three and 10 years.
To help provide an income for both parties from the arrangement during the transition period, tax relief of up to €5,000 annually can be shared between the partners for a period of up to five years.
"There was fear factor among farming couples in the past about how they should handle the transfer of the farm.
"But we've got a real conversation going about this now, and this measure takes the risk out of it," claimed Mr Coveney.
Finance officials estimate that the measure will cost the exchequer €10m, but Mr Coveney believes that demand may drive this higher.
He also rejected concerns from the Irish Creamery Milk Suppliers Association (ICMSA) that the measure would be too complex.
"Setting up a farm partnership is not rocket science. They just didn't exist 10 years ago because there were no incentives there.
"Now there's close to 1,000, with 70pc of them within families.
"But the problem was that there was no incentive to hand over the farm, and achieve a regime change," said the minister.
Officials at the Department of Agriculture described the measure as a world-first, and the product of over a year of discussions with both the Department of Finance and EU Commission officials.
They added that existing inter-family partnerships would qualify for the new reliefs, provided the younger generation were under 40 years of age and trained as farmers.