Farm Ireland

Monday 18 December 2017

How will the Finance Bill affect farms?

Aisling Meehan

The much anticipated Finance Bill 2012 was published last Wednesday. It includes the finer details of what was announced in the Budget last December, but it also includes a number of further measures which had not been announced in the Budget. The following are the ones that farmers will be interested in.

Capital Acquisitions Tax (CAT)

- Agricultural Relief: This allows a farmer to use just 10pc of the value of agricultural property when calculating CAT.

To qualify as a farmer in the Revenue's eyes, at least 80pc of your assets must comprise agricultural property after taking the gift or inheritance.

Debts and encumbrances are allowable against your off-farm dwelling in deciding whether or not an individual qualifies as a farmer.

The amendment ensures that a loan that is secured on an off-farm dwelling will not be allowed as a deduction unless it is used for the purchase, improvement or repair of that house.

The amendment also removes the condition that an individual must be resident in the State for three years after the date of the gift or the inheritance in order to qualify for agricultural relief. The amendment applies to gifts and inheritances taken on after February 8 this year.

- Tax-free thresholds: The link between the group tax free threshold and the consumer price index is to be broken. The Group B threshold has been rounded up from €32,204 to €33,500 and Group C threshold from €16,602 to €16,750 with effect from December 7 last year. The Group A threshold remains unchanged from the Budget announcement of €250,000.

Also Read

- Pay and file date: This is being moved back from September 30 to October 31 to alleviate potential difficulties for taxpayers where an inheritance takes place close to the pay and file date.

Stamp Duty

- Self-assessment and modernisation: Stamp duty is to be put on a self-assessment footing, in common with other taxes.

Transactions will be required to be stamped within 30 days of a transaction and audit and appeal procedures will be introduced. The changes will apply from a date still to be set.

- Young, trained farmer relief: An additional course (FETAC level 6 Special Purpose Certificate in Farm Administration) is being added to the list of qualifying courses for the relief.

Capital Gains Tax (CGT)

- Exemption for certain State bodies: The sections providing for exemption for transfers to or by State bodies are being amended to provide that disposals by Teagasc are exempt from CGT and disposals not at full market value to local government corporate services bodies do not attract CGT charge.

- Exemption for compensation payments to turf cutters: Compensation given to turf cutters for giving up the right to cut turf in Special Areas of Conservation or Natural Heritage Areas under the scheme administered by the Minister for Arts, Heritage and the Gaeltacht will be exempted from CGT.

Stock Relief

An additional qualifying course (FETAC level 6 Special Purpose Certificate in Farm Administration) was made available for stock relief for young, trained farmers.

Income Tax

- Relief from third level fees: In line with the increase in the student contribution charge announced in the Budget, the scheme of tax relief on third-level tuition fees is being amended to provide that the first €2,250 in fees per claim will be ineligible for tax relief where any of the fees are paid in respect of students in full-time education.

Prior to the change, the first €2,000 was disregarded per claim. Where students are in part-time education, the first €1,125, as opposed to the first €1,000 in fees, will be ineligible.

Provisions Already Announced in Budget

The amendments relating to carbon tax and registered farm partnerships were announced in the Budget statement. The re-provision for a double deduction in computing the profits of a trade of farming for the increase in the rate of carbon tax on farm diesel is due to come into effect on May 1.

For registered farm partnerships, the current rate of 25pc stock relief will increase to 50pc -- and for certain young, trained farmers entering such partnerships, a rate of 100pc stock relief will be available for a period of four years starting in the years he/she becomes a 'qualifying farmer'.

This stock relief is subject to clearance with the European Commission and the start date for this scheme is still to be announced.

A new incentive relief from CGT is being introduced for land and buildings bought between December 7 last year and December 13, 2013. Where such property is held for more than seven years, the gains attributed to that seven-year period will be relieved from CGT.

The Finance Bill will go through a number of stages of the legislative process before it is enacted on April 6.

As in previous years, the unfavourable changes tend to get included in the final stages of the Finance Bill so we will be keeping a close watch on the committee stage and the report stage amendments.

Disclaimer: Solicitor, tax consultant and Nuffield scholar Aisling Meehan does not accept responsibility for errors or omissions. Tel: 061 368 412

Indo Farming