FARM RESTRUCTURING RELIEF

by

Golden Wheat in June

Section 48 Finance Act 2013 inserted Section 604b into TCA 1997

The Department of Agriculture have issued guidelines as provided by the new section

Farm restructuring is the sale and purchase of qualifying lands:

  • Where a famer sells a parcel of land and buys a parcel of land
  • Sale and purchase must be within 24 months of each other.
  • Initial transaction must happen between 1st January 2013 and 31st December 2015
  • If the land is exchanged, it must take place between 1st January 2013 and 31st December 2015.
  • The interaction of the sale and purchase together result in an overall reduction in the distance between parcels of land comprised in the farm, including land that has been leased for at least two years with a minimum of five years to run
  • Thereby leading to a reduction in the fragmentation of the farm and an improvement in the operation and viability of the consolidated farm.

The sale of an existing farm and the replacement of it by the purchase of another farm is not farm restructuring for the purposes of this relief.

A farmer is an individual who spends not less than 50% of their working time farming.

 FARM RESTRUCTURING CERTIFICATE (FRC)

A Farm Restructuring Certificate is a certificate issued by Teagasc to the farmer restructuring his/her holding. It identifies the lands sold and purchased and it certifies that Teagasc is satisfied, on the basis of information available at the time of so certifying, that the sale and purchase of lands complies with the conditions of restructuring as set out in the Guidelines.

FARM RESTRUCTURING RELIEF IF FRC OBTAINED

  • Purchase price exceeds the sales price –  no Capital Gains tax will apply
  • Sales price is higher than the purchase price – capital gains tax due on portion not reinvested.
  • If purchase takes place before the sale, the relief is given at time of the sale of the land
  • If the sale takes place first, Capital Gains Tax is paid in the normal manner and a refund can be claimed when the purchase takes place
  • Where land is exchanged simultaneously, the relief will be given at the time of exchange.
  • Clawback of CGT relief will arise if qualifying land is disposed of within five years of the purchase or exchange date. Furthermore CGT may also be due on this subsequent disposal. A CPO does not give rise to clawback.
  • Farm restructuring relief does not cover the clawback of CGT relief claimed by a parent where the land is disposed of within six years of acquisition.