This is a ten-part Worldwide Tax Blog Series on a cross section of amendments in the Irish Tax System and a general overview:
Universal Social Charge – Part 1
The Remittance Basis for Income Tax – Part 2
The Remittance Basis for Capital Gains Tax – Part 3
Taxation of Certain Social Welfare Benefits – Part 4
Mortgage Interest Relief – Part 5
Donations To Approved Bodies – Part 6
Farm Restructuring Relief – Part 7
FATCA – The US Foreign Account Tax Compliance Act – Part 8
Close Company Surcharge – Part 9
7. FARM RESTRUCTURING RELIEF
This new relief announced in the 2013 Budget enables individual farmers to obtain relief from CGT (Capital Gains Tax) where there is a sale or exchange of agricultural land where other agricultural land is being purchased or acquired under an exchange.
This is subject to Ministerial Order to take effect.
To qualify for the relief the following conditions must be fulfilled:
1. The sale/purchase and exchange of land is between farmers (i.e. both parties must be farmer) who spend not less than 50% of that individual’s normal working time farming; and
2. A farm restructuring certificate must be issued by Teagasc making the agricultural land qualifying land; and
3. Where the qualifying land is purchased/acquired/exchanged in joint names, each joint owner must be a farmer in his/her own right. This excludes spouses and civil partners; and
4. The first sale or purchase must occur in the relevant period (i.e. between 1st January 2013 and 31st December 2015) with the matching purchase or sale taking place within two years from that date; or
5. Where there is an exchange both transfers under the exchange must take place between 1st January 2013 and 31st December 2015; and
6. The consideration for the qualifying land being purchased or exchanged must equal or exceed the proceeds from the sale of the qualifying land for the relief to be granted in full. In other words, relief is given in full where the value of the land sold/exchanged is less than or equal to the value of the land purchased/acquired by exchange.
7. Where the consideration for the qualifying land purchased or exchanged is less than the consideration on the sale of the qualifying land then the relief is granted by reducing the chargeable gain by the same proportion that the acquisition costs bear to the sale/exchange proceeds for the qualifying land.
Can the Relief be clawed back?
1. The relief can be clawed back if the qualifying land is sold within five years from the date of purchase or exchange.
2. The clawback will not arise in the case of compulsory acquisition.
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