Capital Gains Tax Relief a Vital Element in Encouraging Farm Mobility – Kane
IFA Farm Business Chairman James Kane has said that the Government must introduce relief from Capital Gains Tax (CGT) for the purpose of farm consolidation in Budget 2012 if there is to be an increase in land mobility.
James Kane said, “The Minister for Agriculture, Simon Coveney, has correctly identified that the taxation system must be effectively used to support the goals of land mobility, farm transfer and investment. With farm fragmentation and only 7% of farm owners aged under 35, the age profile and structure of farming must be improved if we are to achieve the targets for expansion set out in Food Harvest 2020.”
He continued, “Many farmers did not avail of the stamp duty consolidation relief that ended in June 2011. This was due to the fact that many farmers would have faced a large Capital Gains Tax bill on the disposal of their land, whether this was sold or not. This would not have been a viable option for the farm, and so farmers did not undertake the transaction.”
In its pre-Budget submission, IFA has proposed that there must be comprehensive set of measures to encourage land mobility. These are:
Reduction of stamp duty rates for farmland;
Relief from CGT for transactions occurring for the purpose of farm consolidation and for farmland sold under CPOs and subsequently replaced; and
Retention and promotion of the Land Leasing Tax Exemption Scheme.
In addition, IFA has proposed that existing reliefs for lifetime farm transfers and investment, including Agricultural Relief, CGT Retirement Relief and Capital Allowances for farm buildings, must be retained in their current form.
Mr Kane concluded, “The achievement of the <i>Food Harvest 2020 </i>targets requires a sustained improvement in the competitiveness and efficiency of primary agriculture. The benefits to the economy of the retention of existing and the introduction of targeted taxation measures, will be felt immediately and long-term through increased output, tax revenues and export earnings from the agri-food sector.”