Farm families face ‘catastrophic’ reduction in inheritance tax relief

Farm inheritance tax relief should be reduced, a group of experts has advised the government.

It comes amid concerns Ireland’s very wealthy are using the relief as a tax-efficient way to transfer large amounts of wealth to their children and as a hedge against inflation.

The government-appointed Commission on Future Taxation is set to recommend that the level of WCB relief for farming and business be changed.

Under this relief, the market value of a qualifying property or farm is reduced by 90% when calculating tax on a gift or inheritance.

The Commission wants this amount to be reduced to 80%, arguing that such a change would still exclude the majority of farms from the tax.

Reducing the farm relief from 90% to 80% would result in an additional tax yield estimated at €9 million for the full year. The estimated impact of reducing business aid from 90% to 80% is an additional return of €11 million for the full year.

Leading agricultural consultant Martin O’Sullivan said such a reduction in farm support in the absence of a simultaneous significant increase in the personal tax threshold would mean that a farm worth over $1.675 million (which includes stock, machinery and duties) would exceed the current personal tax exemption for a favorite son, daughter or niece/nephew.

This, he said, would be “catastrophic” for a large number of farming families and could affect farms of 100 acres and more depending on current land values.

“For example, a farm with 150 acres of decent quality land could face a tax bill of up to €250,000. Such a move would be a hammer blow to the next generation of farmers and undo all the progress made over the past two decades on this front,” O’Sullivan said.

“It would be playing into the hands of the big operators who would buy up the assets of those who simply could not pay the heavy tax bills that would result in the event of an inheritance.”

A 2014 review of farm taxes by the Department of Finance found that maintaining this relief is a key measure to ensure the continued viability of farm businesses as they pass from one generation to the next.

However, another perspective provided by ESRI suggests that the main beneficiaries, with Business Relief in particular, are not those who inherit or are gifted with small farms or family businesses, but much larger ones.

It comes after former attorney general and Tánaiste Michael McDowell said recently that the “super rich” were building portfolios of tens of thousands of acres of farmland “simply as stores of long-term value.”

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Agriculture Minister Charlie McConalogue wants to keep all relief for farmers. Photo: Conor Ó Mearain/Collins Photos

Agriculture Minister Charlie McConalogue wants to keep all relief for farmers. Photo: Conor Ó Mearain/Collins Photos

Addressing the Independent of agriculture recently, Agriculture Minister Charlie McConalogue said he would push for the maintenance of farm tax breaks, linked to the carbon tax and inheritance tax. “That’s my goal – to hold everything back,” he said.

“Farming is viewed strongly and favorably in some taxes because of the importance of the family farming model and the importance of ensuring that daughters and sons, nieces and nephews can inherit the operating and perpetuating the family farming tradition,
and indeed to ensure that young farmers are encouraged.

ICMSA President Pat McCormack recently said that his organization has always believed that “farmland is not just some sort of fixed asset like bullion or stocks or crypto.”

“Our position was, and still is, that farmland is the means by which farmers make a living; it is and should be considered a professional tool,” McCormack said.

“That’s why we generally share reservations about seeing very wealthy individuals or corporations increasingly viewing the ownership of prime farmland as just one option among many in their investment portfolios. .

“ICMSA is a farmers’ organization, and we believe it is far more desirable – and beneficial to society – to have prime farmland owned by farmers who will work sustainably and produce food from that.It shouldn’t just be an asset in some non-farm billionaire’s private account that is leased or leased as they see fit.

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