Laois Co Council urged to write to minister over acquisition tax on farms
Cllr Conor Bergin
INHERITANCE is one of the biggest problems facing agricultural communities across Ireland, risking a potential collapse in the number of farms moving to the next generation.
The warning was delivered to the latest meeting of Laois Co Council by Cllr Conor Bergin, who urged the council to write to the minister for finance to urge him to review the set-up of the Capital Acquisitions Tax (CAT) on family farms and rural businesses and to reform the system, so that inter-generational transfers do not result in forced sales, with the aim that overall inheritance tax rules support rather than undermine continuity in rural communities.
CAT is a capital gains tax on inheritance, which allows for the receipt of gifts and inheritance up to a set value – depending on the type of inheritance – before tax kicks in. The tax is currently charged at a rate of 33 per cent.
The Borris-in-Ossory councillor said: "The rule should help continuity and not force people through a large hassle and we need to ensure that the CAT supports succession, rather than undermines it."
As things stand, he says the system requires a huge amount of planning in advance of a succession and excellent timing, in order to carry out the inheritance with a heavy tax burden or other complication, an endeavour that many busy farmers would have little time for.
He highlighted that family farms are, at the end of the day, businesses simply being transferred from one generation to the next. He questioned if it really should be the State rather than the family that benefits more from the land transfer.
Cllr Bergin underscored the fact that the vast majority of farms are not multi-million euro enterprises.
Another councillor added that we are probably now moving to the fourth generation in Ireland, following on from our achievement of independence, but, given the current inheritance situation, when it comes time to give the land to those young people currently learning their craft on farms, they'll be forced to sell on the land or a portion of the land in order to pay the tax bill.
He said: "Valuations need to go up in line with the fact that property prices are rising. These days, it's more like you are inheriting a liability with a farm rather than a gift."
