Farm heirs could face six figure tax orders

FARMERS and their representatives need to ‘keep their eye on the ball’ as regards the change in the 2015 Budget requiring heirs to land to spend more than 50% of their time operating the holding, a leading accountancy firm has advised this week.

Michael F. Dolan told the Farming Tribune that if the tax reliefs did not apply to someone inheriting a decent sized farm, the Capital Acquisitions Tax (CAT) could run into a seriously high figure.

He said that someone inheriting a farm with an asset value of €800,000, and who didn’t qualify for the tax relief, would be facing an inheritance bill of €189,750 based on an exemption of €225,000 and a CAT rate of 33%.

“I suppose one of the worries here, and especially in the context of West of Ireland farms where most of the farmers are part-time, is whether holding down a full-time off-farm job could mean that you don’t qualify for the tax relief,” Michael Dolan told the Farming Tribune.

He said that while a value of €800,000 for example might seem a bit high, a well developed medium sized farm with infrastructure in place such as sheds and roadways, could easily find itself in this valuation range.

“If someone had to face into that kind of a bill for inheriting a farm, it would be just too much of a financial burden for the inheritor to take on. It is something to be watched,” said Michael Dolan.

He warned that this was something that seemed to have ‘slipped in under the radar’ over recent weeks, although there could be changes before the Finance Bill would be enacted.

“Probably at this stage, it is something that the main farming organisations are taking up at Government level, but the implication of the Budget proposal, as it now stands, are quite serious,” said Michael Dolan.

For more, read this week’s Connacht Tribune.