Consultation on the implementation of the Agri-taxation Review 2014 and income stabilisation and taxation

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Consultation on

  • the implementation of the Agri-taxation Review 2014;

  • income stabilisation and taxation.

The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe, T.D., and Minister for Agriculture, Food and the Marine, Michael Creed, T.D., invite interested parties to make submissions in relation to the progress that has been made in implementing the 25 recommendations of the Agri-taxation Review 2014. Views are also sought on how the tax system might further address income stability in the primary agriculture sector.

How to get involved?

Written submissions are welcome and should be sent to: agritax2018@finance.gov.ie

Alternatively, you can respond by post to:

Agritax 2018

Tax Policy Division, Rm 2.2

Department of Finance

Government Buildings

Upper Merrion Street

Dublin 2

D02 R583

Please include contact details if you are responding by post.

 

The consultation process is open from 27th April until 17:00 25th May 2018. Any submission received after this date may not be considered. It is intended that the report of the review group will be presented to the Minister for Finance and the Minister for Agriculture, Food and the Marine in summer 2018.

 

Consultation on the implementation of the Agri-taxation Review 2014 and income stabilisation and taxation

ENDS

27th April 2018

 

Contact:

Aidan Murphy, Press Officer, Department of Finance – 085 886 6667

pressoffice@finance.gov.ie

 

Notes for Editors:

Click here for full details on Public Consultation on Implementation of the “Agri-taxation Review” and the Issue of Income Stabilisation in the Context of Taxation.

In 2017 the Minister for Finance and Public Expenditure and Reform, Paschal Donohoe, T.D. and Minister for Agriculture, Food and the Marine, Michael Creed, T.D. committed to establish an inter-departmental working group to assess the progress made on the implementation of tax measure recommendations contained in the Agri-taxation Review 2014[1]. This public consultation supports the commitments made by the Minister.

The 2014 review was commissioned to examine agri-taxation measures and to make recommendations to ensure resources are directed towards activities of maximum benefit to the sector. This was a joint initiative between the Department of Finance and the Department of Agriculture, Food and the Marine. The working group also included the Revenue Commissioners. The review came back with 25 recommendations, listed below. These recommendations are grouped into 6 broad categories that reflect government priorities: increase the mobility and the productive use of land; assist succession; complement wider agriculture policies and schemes; alternative farming models such as farm partnerships; responses to increasing income volatility, and; general recommendations. 

The terms of reference for the group are as follows:

  1. A summary of the context, background and process of the Agri-tax Review.
  2. An update of the context since the completion of the Agri-tax Review, to include: Brexit, climate change and the abolition of milk quotas.
  3. A summary of outcome of Agri-taxation Review & implementation in Budgets 2015, 2016 & 2017, including a summary table of the recommendations and their implementation/current status. In particular, regard should be had to:
    1. Analysing income stabilisation and the proposed farm deposit scheme, including a public consultation process and resultant submissions from stakeholders, and
    2. The recommendation in the Agri-tax Review on data collection and management in order to comply with state-aid requirements.
  4. The mapping of direct and tax expenditure supports available to the agricultural sector.
  5. Any other matters arising in the course of the review.

 

As previously advised in the Budget 2018 press release:

“Minister Donohoe has announced that officials from the Departments of Finance and Agriculture will commence work on assessing progress on the review of tax measures in the Agriculture sector, which was last completed in 2014. This assessment will also concentrate primarily on the issue of income stabilisation and the issue of information collection and management to comply with EU State Aid reporting requirements. The work will be conducted in line Department of Finance Tax Expenditure Guidelines. The process will be commenced following completion of Finance Bill 2017 and is, of course, all the more important having regard to the current economic context in which the sector operates as it prepares for the challenges posed by Brexit.” 

The release can be found at: https://www.finance.gov.ie/wp-content/uploads/2017/10/Finance-Bill-2017-Notes-for-Editors.pdf

 

The consultation period runs from 27th April 2018 to 17:00 25th May 2018.

 

Recommendations
A.      Increase the mobility and the productive use of land
1. Retain Relief for certain income from leasing of farm land.
2. Increase the income thresholds for relief from leasing income by 50%.
3. Introduce a fourth threshold for lease periods of 15 or more years with an exemption for the first €40,000 per annum.
4. Remove the lower age threshold of 40 years of age for eligibility for the long-term leasing tax relief.
5. Allow non-connected limited companies as an eligible lessee for the long-term leasing tax relief.
6. Relieve stamp duty on long-term leases (5 years or more) for agricultural land.
7. Raise awareness among land owners of the current reliefs for long-term leasing.
B.       Assist succession
8. Retain Agricultural Relief from Capital Acquisitions Tax.
9. Target Agricultural Relief from Capital Acquisitions Tax to qualified or full-time farmers or to those who lease land out on a long-term basis.
10. Retain Retirement Relief from Capital Gains Tax at current levels.
11. For transfers under Retirement Relief, extend the eligible letting period of a qualifying asset to 25 years.
12. 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.
13. Extend Stamp Duty Consanguinity Relief on Non-Residential Transfers to the end of 2017.
14. Retain current stamp duty exemptions on transfers of land.
C.       Complement wider agriculture policies and schemes
15. Retain the current Capital Allowances available to the sector.
16. Retain current Stock Reliefs.
17. Retain CGT relief on farm restructuring, allow whole-farm replacement and extend the measure to the end of 2016.
18. Retain as tax exempt, profits or gains from the commercial occupation of woodlands.
19. Examine the broadening of the scope of Sustainable Energy Authority of Ireland’s (SEAI) ACA scheme to incentivise investment in energy efficient equipment by making it available to non-incorporated businesses.
D.      Alternative farming models such as farm partnerships
20. Retain the current measures and review in the context of new partnership register and supports under the RDP.
E.       Responses to increasing income volatility
21. Retain and enhance Income Averaging by increasing the period from 3 to 5 years.
22. Allow averaging to be availed of where a farmer and/or their spouse receive income from an on-farm diversification trade or profession.
F.       General recommendations
23. Examine the scope for extending income averaging to forestry clear-felling profits.
24. The Agri-taxation Working Group should remain in place to monitor the agri-taxation measures and examine other issues arising; and specifically to:

  1. Examine the feasibility of introducing a risk deposit scheme
  2. Examine the feasibility of introducing a ‘Phased Transfer Partnership’
  3. Examine the tax system to determine unintended barriers to female participation
  4. Examine other issues as necessary.
25. The Agri-taxation Working Group should also work to ensure better data collection on costs and benefits.

[1] (http://www.budget.gov.ie/Budgets/2015/Documents/Agritaxation_%20Review%20_Final_web-pub.pdf