Finance Act 2014 introduced changes to the rules regarding an individuals entitlement to claim Capital Acquisitions Tax Agricultural Relief. The new rules apply where both the gift/inheritance and the valuation date occur on or after 1 January 2015. To claim the relief an individual
- Must be a “farmer” on the valuation date. (At least 80% of his/her assets must be agricultural assets).
- Hold a relevant agricultural qualification.
- They must use the property for agricultural purposes for a period of at least 6 years or lease the property for not less than 6 years once the lessee satisfies the conditions for relief.
- Farm the property for at least 50% of his/her normal working time
- on a commercial basis with a view to a profit.
Revenue have confirmed that for the purpose of this relief, “normal working time” is approximately 40 hours per week. A farmer with off farm employment may qualify for this relief provided they spend a minimum of 20 hours working per week, averaged over a year, on the farm. If a farmer can show that his/her “normal working time” is less than 40 hours a week, Revenue have indicated that the 50% requirement will be applied to the actual hours worked.
If a farmer is continuously making losses Revenue will examine the facts of the situation to determine whether or not they satisfy the “farming on a commercial” basis criteria. Revenue have some flexibly where a beneficiary inherits agricultural property and intends to farm it but is unable to do some from the valuation date because of existing work commitments or other personal circumstances. Revenue’s Guide to Farming Taxation Measures as introduced in the Finance Act 2014 can be found at Revenue.ie
The above is a general commentary on the rules of CAT Agricultural Property Relief. The tax implications of specific cases will depend on individual circumstances. If you think the above might be relevant for you, specialist advice should be obtained. HSOC has considerable experience in this area and we would be happy to discuss the various issues with you.