New stock relief incentive for farm partnerships
Reduced stamp duty on agricultural land transactions
Restructured Capital Gains Tax retirement relief
The Minister for Agriculture, Food and the Marine, Simon Coveney TD today said that "Budget 2012 recognises the key role that agriculture and the agri-food industry has to play in Ireland’s economic recovery. The measures introduced will allow the sector to continue its success in expanding Ireland’s exports and realising the objectives of Food Harvest 2020*".
The Minister’s objective is to ensure the continuation of this success. The strategy for the sector is already clearly set out in the Food Harvest 2020 report. The changes required are significant but do not require large additional expenditure. The main allowances for farmers will continue in force, but there are also some additional provisions. These include:
1. A new stock relief incentive to encourage farm partnerships. An enhanced 50% stock relief will be available for all registered farm partnerships, and a 100% stock relief will be available for certain young trained farmers forming such partnerships. Subject to EU State Aid approval, this new incentive will be available until December 2015.
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3. Restructuring of the retirement relief on Capital Gains Tax to incentivise the earlier transfer of farm assets to the next generation, and to encourage the sale of land by those farmers with no successors. An upper limit of €3m will be introduced on family transfers where the individual transferring is aged over 66, compared to an unlimited amount currently. On non-family transfers, the current upper limit of €750,000 will be reduced to €500,000. These changes will apply from 2014 onwards, thereby allowing time for older farmers to plan for transfer. These changes will aid land mobility and improve the age profile of Irish farmers.
4. The VAT rate applied to open farms will be 9% rather than the new standard rate of 23%. This will be of significant benefit to such farms, which offer an important opportunity for farm diversification. It brings the treatment of open farms into line with the VAT rate applied to museums and other cultural attractions.
5. A Capital Gains Tax incentive for property purchased before the end of 2013 should also stimulate the land market. A property bought during this period and held for at least seven years will be relieved from Capital Gains Tax.
6. The exemption rate for the Universal Social Charge has been raised from €4,004 to €10,036. This will be of particular benefit to low-paid seasonal workers in the farming sector.
7. Consistent with the commitment in the Programme for Government on carbon tax, farmers will be allowed a double income tax deduction in respect of the increased costs arising from the change in carbon tax (the carbon tax is to increase from €15 per tonne to €20 per tonne).
8. An amendment to the VAT refund order for farm construction will allow farmers to claim a refund on wind turbines purchased from 1st January 2012.
Reducing the stamp duty rate on agricultural land from 6% to 2%. A half rate (1%) will be applicable to transfers to close relatives until the end of 2014. This change will substantially reduce the stamp duty payable on transfers of farm land by gift or by sale. It should stimulate a stagnant land market – currently only 0.5% of total agricultural land is offered for sale annually. It will also promote inter-generational transfer, with the cost of lifetime transfer to transferees who do not qualify for the young trained farmer stamp duty relief reduced considerably.
"The Budget also includes additional supports which will benefit the food industry"
Minister Coveney stated, "including improvements to the R&D tax credit and a Foreign Earnings Deduction to apply where an individual spends 60 days a year developing markets for Ireland in the BRICS countries (Brazil, Russia, India, China and South Africa). What we need now is a young, dynamic, professionally trained cohort of farmers with the enthusiasm to take on new challenges and new forms of partnership in a global marketplace. The tax changes in Budget 2012 encourage partnership formation and incentivise inter-generational land transfer. I believe they will be of real benefit to farmers and the economy generally", Minister Coveney said.