Reducing Capital Gains Tax relief for farmers could save State almost €8m – Finance
Officials in the Department of Finance have assessed the possibility of reducing the current level of Agricultural Relief on Capital Gains Tax (CGT).
The analysis was carried out by the Department’s tax strategy group with notes that Agricultural CGT is the seventh most expensive tax relief for the state at €215m per annum.
Qualifying farmers can avail of CAT agricultural relief which reduces liability to CAT by 90pc.
To qualify for agricultural relief, 80pc 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.
The relief operates by reducing the market value of 'agricultural property' by 90pc, so that gift or inheritance tax is calculated on an amount - known as the 'agricultural value' - which is substantially less than the market value.
In documents developed to inform Minister for Finance Pascal Donohoe, the group said reducing the scale of the reliefs from 90pc to 75pc of the taxable value of the relevant assets and capping the relief at €3m (originally suggested by the Commission on Taxation) would increase the yield from CAT.
It said reducing agricultural relief from 90pc to 80pc for example would result in an estimated additional yield of €7.7m for the full year 2017.