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
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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
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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
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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
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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
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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).
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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
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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.
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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.
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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).
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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.
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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
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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
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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
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