“Finance Bill 2012 builds on the Government’s commitment to the agri-food sector as announced in the Budget and features a number of new initiatives that will be of further benefit to a wide range of interests in the sector.”
The Minister for Agriculture, Food and the Marine, Simon Coveney TD, has welcomed the publication of the Finance Bill. “The Finance Bill 2012, published today includes several significant measures which will benefit the agri-food industry, including:
- New stock relief incentive for farm partnerships
- Reduced stamp duty on agricultural land transactions
- Restructured Capital Gains Tax retirement relief “
In addition to the significant measures announced in Budget 2012, the Minister welcomed the addition of two new measures in the Finance Bill:
- An additional qualifying course (FETAC level 6 Specific Purpose Certificate in Farm Administration) will be added to the list of qualifying courses for 100% stock relief and 100% stamp duty relief for young trained farmers
- The definition of bread, for the purposes of the application of the zero rate of VAT, is being revised to reflect the breads currently available on the market, taking account of the development of bread for health, ethnic and other reasons. As a result of the revised definition the range of zero-rated breads will include loaves, rolls, batch bread, bagels, baps, blaas, burger buns, finger rolls, wraps, naan breads and pitta bread.
The Finance Bill will also enact significant changes, first announced in the Budget in December, which underline the Government’s commitment to supporting the agri-food sector. “These measures recognise the contribution which the sector can make to economic recovery and future growth”, Minister Coveney said.
1. Farm partnerships incentive
A new stock relief incentive to encourage farm partnerships will be introduced. An enhanced 50% stock relief will be available for all registered farm partnerships, and a 100% stock relief will be available for certain young trained farmers forming such partnerships. Subject to EU State Aid approval, this new incentive will be available until December 2015.
2. Reduced stamp duty on agricultural land
The stamp duty rate on agricultural land will be reduced from 6% to 2%. A half rate (1%) will be applicable to transfers to close relatives until the end of 2014. This change will substantially reduce the stamp duty payable on transfers of farm land by gift or by sale. It should stimulate a stagnant land market – currently only 0.5% of total agricultural land is offered for sale annually. It will also promote inter-generational transfer, with the cost of lifetime transfer to transferees who do not qualify for the young trained farmer stamp duty relief reduced considerably.
3. Restructuring of Capital Gains Tax retirement relief
Restructuring of the retirement relief on Capital Gains Tax to incentivise the earlier transfer of farm assets to the next generation, and to encourage the sale of land by those farmers with no successors. An upper limit of €3m will be introduced on family transfers where the individual transferring is aged over 66, compared to an unlimited amount currently. On non-family transfers, the current upper limit of €750,000 will be reduced to €500,000. These changes will apply from 2014 onwards, thereby allowing time for older farmers to plan for transfer. These changes will aid land mobility and improve the age profile of Irish farmers.
4. VAT rate on open farms
The VAT rate applied to open farms will be 9% rather than the new standard rate of 23%. This will be of significant benefit to such farms, which offer an important opportunity for farm diversification. It brings the treatment of open farms into line with the VAT rate applied to museums and other cultural attractions.
5. Universal Social Charge
The exemption rate for the Universal Social Charge has been raised from €4,004 to €10,036. This will be of particular benefit to low-paid seasonal workers in the farming sector.
6. Carbon tax – offset of increased costs for agricultural diesel
Consistent with the commitment in the Programme for Government on carbon tax, farmers will be allowed a double income tax deduction in respect of the increased costs arising from the change in carbon tax (the carbon tax is to increase by €5 per tonne, the equivalent of 1.6 cents per litre of agricultural diesel).
7. Carbon tax for certain Combined Heat and Power (CHP)
Provision is made to allow for a partial relief from the carbon tax for certain Combined Heat and Power (CHP) installations not covered by the EU Emissions Trading Scheme.
8. VAT refund for wind turbines
An amendment to the VAT refund order for farm construction will allow farmers to claim a refund on wind turbines purchased from 1st January 2012.
9. Foreign Earnings Deduction
A Foreign Earnings Deduction will apply where an individual spends 60 days a year developing markets for Ireland in the BRICS countries (Brazil, Russia, India, China and South Africa). This will be of further benefit to a wide range of interests, including producers, retailers and exporters.