Specific Details
Finance Bill 2024
Intended results
To highlight a number of key areas of concern relating to the Finance Bill 2024. The following sets out these concerns along with proposed amendments to address same.
Conditionality associated with qualifying for Agricultural Relief
The availability of Agricultural Relief, which discounts agricultural assets by 90% to qualifying farmers on transfer, is critical to support the transfer of family farms to the next generation thereby supporting generational renewal within the agricultural sector.
The continued availability of agricultural relief to genuine farmers and their families is a key objective of IFA. In recent years, agricultural use has been availed of by investors to transfer wealth to the next generation in a tax-efficient manner. To address this, IFA proposed the following in our submission ahead of Budget 2025
• To avail of Agricultural Relief the transferor or transferee, or a combination of both, must pass the active farmer test set out under the current Agricultural relief clause for a minimum of 15 years.
• Where the above condition is met; to avail of Agricultural relief, the retention period of the individual receiving the gift or inheritance remains at 6 years.
• With effect from the passing of the legislation, where land is purchased by an investor; the retention period of the individual receiving the gift or inheritance should be increased from 6 to 15 years in respect of a claim for agricultural relief.
• In addition, where land is purchased by an investor; any periods where land is leased to an active farmer do not count towards the retention period
The 2024 Finance Bill differed somewhat from the above proposal, by requiring the disponer to qualify as an active farmer to qualify for agricultural relief. The proposed wording of the Finance Bill 2024 requires the disponer to be an active farmer for the period of not less than 6 years ending immediately prior to the date of the gift or inheritance, or the agricultural property comprised in the gift or inheritance was leased to an individual who satisfies the active farmer conditions.
To highlight a number of concerns with the proposal that IFA is seeking to be addressed. These are as follows
• The structure and nature of farm businesses has changed significantly in recent years with an increasing number of farm companies or incorporated structures prevalent along with farm partnerships. It is critical that land being farmed/let in these structures continues to qualify for agricultural relief. To achieve this we would suggest that the use of the word ‘individual' under sections 5 and 6 be replaced with the phrase ‘person, partnership or company'.
• Currently, a significant amount of land is rented in informal letting arrangements. Land farmed via this method must qualify for agricultural relief under section 5 (b) & section 6 (c) in the Finance Bill. To achieve this we would propose that the use of the word ‘lease' within the relevant sections are replaced with ‘let'.
• There is a significant amount of land which is farmed by the next generation which is currently not under any formal agreement (lease or otherwise) but is being genuinely farmed. There is a real concern that this land will no longer qualify for agricultural relief in 2025 owing to a lease agreement not being put in place, either due to oversight or incapacitation of the landowner. IFA believe it is unacceptable to allow this to occur.
Accordingly, IFA is seeking an amendment to the Finance Bill to allow disponers, whose land which is being farmed by the successor to qualify for agricultural relief. We recommend the removal of the word “immediately” from the sentence “for the period of not less than 6 years ending immediately prior to the date of the gift or inheritance—“ under 2 (b) would help significantly in this regard.
• As drafted, the Bill will make it very difficult for farmers to avail of agricultural relief when passing on their farmhouse to the next generation. A very significant number of farmers who will be transferring agricultural assets in the coming years do not hold the relevant agricultural qualifications referred to in the Bill.
If they have retired, they will also fail to meet the 50% of time farming test. As draft, these individuals would not be in a position to transfer their farmhouse via agricultural relief. The removal of the word “immediate” as outlined above would help address this issue also
• At the very least given the significance of the changes proposed, a reasonable transitional period of a minimum of 12 months from 1 January to 31st December 2025, should be provided to allow landowners to put in place land lease agreements to ensure genuine farmers can avail of agricultural relief.
• Where land is inherited, and the individual failed the six-year requirement due to their death during the period between their own inheritance and the 6 year period they should be deemed to be an active farmer.
• In addition, there are no provisions or allowances for successive benefits where land transfers in quick succession due to multiple deaths over a period these scenarios need to be catered for.
• The requirement of the deceased or individual providing the gift being an active farmer immediately prior to inheritance/gift provides no opportunity for those who are unfortunate to need end of life care, trusts or life interest to qualify for the relief. This must be removed.
• There is a significant amount of land held on trust. In many cases these are life-interest trusts where the land was left to a spouse for their life and then onto the next generation or discretionary trusts where lands were left to minor children or incapacitated individuals.
While a provision was made for discretionary trusts under Section 4 this provision is not sufficient to ensure lands held under a discretionary trust can still avail of relief due to the wording used under Section 2 (b). In 4 addition, no provision has been made for lands held under life-interest trusts to enable these lands to satisfy the conditions under subsection 2 (b).
• There is no mechanism for a farmer who inherits lands under a life interest trust as a transferee under Section 32(2) to avail of relief. Where the life-tenant to a life interest trust satisfies the active farmer conditions the remainderman should also be able to avail of relief
• A long running issue with the existing active farmer conditions has been the fact that the farmhouse does not appear to have ever been catered for and it does not appear that the farmhouse has been thought of again.
To note the proposed removal of conditional gifts as a method of transferring non-agricultural assets pending their conversion into agricultural assets within a 2-year period. IFA believe that further consideration is needed of the impact this will have on genuine farmers; accordingly, IFA recommend that the proposed removal of conditional gifts is postponed for at least 12 months to allow for further consultation on the issue.
Residential Zoned Land Tax
IFA is fully aware of the current housing challenges and indeed the rationale underpinning the Residential Zoned Land Tax (RZLT), however we have continually opposed the inclusion of land which currently forms an integral part of existing farm operations within its remit.
To emphasise that this tax is unjust, inequitable and penal on farm families.
To highlight that the farming of agricultural land is NOT land speculation or land hoarding. In most situations the land has been owned by the same family for generations, used to earn a living and provide for their family. It was never purchased for, or intended, to be used for housing development.
To highlight that the Residential Zoned Land Tax (RZLT) is disproportionate to the income generation potential from farming and will make farms unviable.
To highlight that the Residential Zoned Land Tax (RZLT) is discriminatory on farmers – food production is necessary service. Farming should be exempted similar to other businesses that provide a service to the local area or those liable for commercial rates.
To highlight that there are landowners with residential zoned land on the market for years, but there is no developer there to buy it. Farmers cannot be liable for Residential Zoned Land Tax (RZLT) in this scenario.
To highlight that there exists a huge lack of awareness around the Residential Zoned Land Tax (RZLT) – there was no legislative provision for Local Authorities to directly engage with impacted landowners while timelines to appeal were very tight.
To highlight that the 2024 Finance Bill contains the following amendment “Exemption on submission of request for change to zoning of land included on revised map for the year 2025”. While this effectively will result in the deferral of the RZLT for 2025 on submitting a request for change of zoning, it places an additional burden on farm families, many of which have already made an application for dezoning of land that was rejected.
The current proposal as part of the 2024 Finance Bill only effectively defers the imposition of RZLT on genuinely farmed land for 2025 and does not provide a long-term solution.
Aidan Davitt
Senator (Seanad)
Alice-Mary Higgins
Senator (Seanad)
Amii McKeever
Adviser to Minister (Department of Agriculture, Food and the Marine)
Barry Cassidy
Special Adviser (Department of Agriculture, Food and the Marine)
Bernard Durkan
TD (Dáil Éireann, the Oireachtas)
Charlie McConalogue
Minister (Department of Agriculture, Food and the Marine)
Damien English
TD (Dáil Éireann, the Oireachtas)
Declan O'Rourke
Special Adviser (Department of Agriculture, Food and the Marine)
Jack Chambers
Minister (Department of Finance)
Jim O'Callaghan
TD (Dáil Éireann, the Oireachtas)
John McGuinness
TD (Dáil Éireann, the Oireachtas)
Maria Byrne
Senator (Seanad)
Marie Sherlock
Senator (Seanad)
Martin Heydon
Minister of State (Department of Agriculture, Food and the Marine)
Martin Kenny
TD (Dáil Éireann, the Oireachtas)
Pat Casey
Senator (Seanad)
Peadar Tóibín
TD (Dáil Éireann, the Oireachtas)
Pearse Doherty
TD (Dáil Éireann, the Oireachtas)
Pippa Hackett
Minister of State (Department of Agriculture, Food and the Marine)
Richard Boyd Barrett
TD (Dáil Éireann, the Oireachtas)
Rose Conway-Walsh
TD (Dáil Éireann, the Oireachtas)
Sam Griffin
Special Adviser (Department of the Taoiseach)
Simon Harris
Taoiseach (Department of the Taoiseach)
Stephen Matthews
TD (Dáil Éireann, the Oireachtas)
Victor Boyhan
Senator (Seanad)