The definition of ‘active farmer’ in the Finance Bill has been described as “unacceptable” by ICSA president Patrick Kent.
The ICSA president Patrick Kent
As currently worded, the definition will exclude many drystock farmers from vital agricultural relief on taxes such as the Capital Acquisitions Tax, he claimed.
“The problem is that Section 74 of the Finance Bill narrowly defines active farmers as devoting at least 50pc of their working time to farming,” said Mr Kent.
“However, many farmers who are inheriting farms involved in low income sectors such as cattle and sheep have no option but to also work off-farm.
“In these cases, it will be potentially impossible to claim that the farm work is taking up another 40 hours on top of a 40-hour (or more) off-farm job,” he said.
“The recent changes in the Budget were designed to incentivise individuals who inherit land – but who have no interest whatsoever in farming it – to lease it long-term to active farmers.
Penalised
It is desirable to support long-term leasing, but active part-time farmers should not be penalised,” said Mr Kent.
“Agricultural relief is vital because it provides a 90pc reduction in the value of agricultural assets for the purposes of calculating liability for Capital Acquisitions Tax.
“Where a farm is being inherited, failure to avail of agricultural relief could mean a substantial tax bill running into tens of thousands.”
Mr Kent said the solution was to ensure that farmers who are engaged in farming – and who gained the appropriate agricultural qualification such as a Green Certificate – should be deemed to be active farmers.
“This needs to be amended at Committee stage and it is urgent as the Finance Bill is due to be concluded in the Oireachtas in December with a view to having the new rules in place from January 1, 2015.”
(Source – Irish Independent – Indo Farming – Declan O Brien – 29/10/2014)