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GSBA presentation
Agricultural reliefs – recent changes
20 March 2015
Síle McHugh
Manager, Tax
Grant Thornton Galway
Agenda
1. Recent changes to agricultural reliefs
i. CGT
ii. CAT
iii. Stamp duty
2. Agricultural planning
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Agricultural reliefs
CGT
CGT – retirement relief
Quick overview
Retirement Relief – no CGT
• aged 55+
• qualifying asset
• owned and used for farming for min 10 yrs
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CGT – retirement relief
Recent changes
To child
• under 66 – no limit;
• 66+ RR ≤€3M.
To 3rd party
• under 66, RR ≤€750k;
• 66+ RR ≤€500k;
• aggregation – spouse / 3rd party
© 2015 Grant Thornton Ireland. All rights reserved.
CGT – retirement relief
Recent changes
CGT RR – FA 2014
Tax to
Revenue
Farmer
• lease up to 25yrs
• Conacre
– RR if sale/long lease by
Dec 2016
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Farm
Sale/gift
shares
3rd party/
children
CGT – retirement relief
Recent changes
Example – John
• John is 70
• owns 80 acre farm with
farm buildings in Corofin
• valued at €800k
• farmed land for 30 yrs
• in 1998 John leased farm
for 17 yrs
• on expiration of lease, will
gift farm to son
© 2015 Grant Thornton Ireland. All rights reserved.
CGT Retirement Relief
Conditions
Met?
Age 55+
Yes
Qualifying assets
Yes
Owned & Farmed min 10 yrs
Yes
Lease for ≤25yrs
Yes
Age 66+ = RR restricted to
€3m. Value farm ≤€3m?
Yes
Full Retirement Relief applies
CGT – retirement relief
Recent changes
Example – John
• instead of gifting to son,
John sells farm to 3rd party
for €800k.
CGT retirement relief
conditions
Age 66+ = RR restricted to
€500k.
Value farm ≤€500k?
Met?
No
Marginal Retirement Relief applies
Likely CGT Hit
© 2015 Grant Thornton Ireland. All rights reserved.
Agricultural relief
CAT
CAT
Overview
• Thresholds:
– €225K from parents;
– €30K from grandparent/uncle/aunt/sibling;
– €15K from strangers.
• €3K each year from any person.
• CAT 33% once threshold exceeded
© 2015 Grant Thornton Ireland. All rights reserved.
CAT – agricultural relief
CAT from
child to
Revenue
Parents
transfer
of shares
Farm
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Child
• 90% relief
• E.G. parent can give €225K
cash to child or €2.25M farm
to child without CAT
Agricultural relief
Recent changes
Beneficiary must meet TWO tests:
1. 80% farmer test; and
2. New Test
Must meet 1) AND 2)
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Agricultural relief
80% farmer test
• at least 80% of assets = farm assets
– at valuation date
– AFTER taking gift/inheritance.
• farm house
© 2015 Grant Thornton Ireland. All rights reserved.
Agricultural relief
New Test
From 1st Jan 2015
Beneficiary must, for min 6 yrs
i. Ag. qualification + farm commercially for profit;
or
ii. ≥50% "normal working time" farming + farm
commercially for profit; or
iii. lease to (i) or (ii).
© 2015 Grant Thornton Ireland. All rights reserved.
Agricultural relief
Recent changes
i. Ag. Qualification
– Sch. 2, 2A or 2B SDCA.
– w/in 4yrs
ii. ≥50% "normal working time"
– Revenue – 40hrs per wk
– 20hrs per week on farm
iii. leasing
– concerns
© 2015 Grant Thornton Ireland. All rights reserved.
Agricultural relief
Revenue guidance
• on inheritance, time to get affairs in order
– work commitments
– living abroad
– student.
• leasing
– can cancel lease and start farming, or vice versa
– can lease land and retain farmhouse, P&M,
livestock.
© 2015 Grant Thornton Ireland. All rights reserved.
Agricultural relief
Example
•
•
•
•
John works in Dublin.
gifted farm in Galway in Jan 2014.
farm worth €480k.
John has €30k cash and €10k car.
John – 80% farmer test
Ag. Assets
480k
Non- Ag.
Assets
40k
Total
520k
% Farm Assets 480k/520k x 100%
Agricultural relief
• pre January 2015
• must meet farmer test
• value of gift reduced to €48k.
• must hold ≥ 6 yrs.
© 2015 Grant Thornton Ireland. All rights reserved.
92%
Meets farmer test
Agricultural relief
Example
Instead, farm gifted in 2015
Agricultural relief
• post 1 January 2015
• farmer test; AND
• second test (farm commercially / lease)
• meets farmer test
• in Dublin – won't farm land for profit
• must lease
• lessee must meet (i) or (ii).
© 2015 Grant Thornton Ireland. All rights reserved.
Agricultural relief
Stamp duty
Stamp duty
Agricultural changes
FA 2014 - Consanguinity Relief
• 1% stamp duty
• conditions:
– transfer farmland
i. before 1 Jan 2016 or
ii. before 1 Jan 2018 if ˂67
– transferee meets tests per CAT relief
– transferor and transferee related.
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Stamp duty
Agricultural reliefs
Young trained farmer
• Stamp duty exemption
• To expire 31 December 2015.
© 2015 Grant Thornton Ireland. All rights reserved.
Agricultural reliefs
Planning
Agricultural relief
Considerations
• Farm ≥€500k sell before 66. Farm ≥€3m gift to
child before 66.
• Conacre – Transfer before Dec 2016
• Both spouses hold farm – do both meet RR?
• Gift cash on proviso that invested in agricultural
assets within 2 years
© 2015 Grant Thornton Ireland. All rights reserved.
Agricultural relief
Considerations
• Ensure child aware of 6 yr clawback - CGT + CAT
• Timing of transfer – 80% farmer test.
• No Ag. Relief? Seek business relief
• CAT relief on lease. But must farm for 10yrs for RR
• Seek advice early!
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Questions
& feedback
© 2015 Grant Thornton Ireland. All rights reserved
Thank You!
Síle McHugh
Tax Manager, Grant Thornton
T +353 91 533 924
E [email protected]
This briefing is provided for general information purposes only and is not a comprehensive or complete statement
of the issues to which it relates. It should not be used as a substitute for advice on individual cases. Before acting
or refraining from acting in particular circumstances, specialist advice should be obtained. No liability can be
accepted by Grant Thornton for any loss occasioned to any person acting or refraining from acting as a result of
any material in this briefing. Grant Thornton, Irish member of Grant Thornton International, is authorised by the
Institute of Chartered Accountants in Ireland to carry on investment business. www.grantthornton.ie
© 2015 Grant Thornton Ireland. All rights reserved.