Short-term land rental ‘a barrier to the progression of Irish agriculture’
Mr O’Dowd has told the Oireachtas agriculture committee that young farmers are being denied the chance to plan from one year to the next due to widespread practice of short-term land rental, also known as ‘conacre’.
The committee is conducting an ongoing review into tax issues relating to agriculture.
“The issue of conacre is causing a major structural barrier for the progression of Irish agriculture. It is not possible to develop sustainable and progressive farming enterprises on the basis of land rented annually as there is no guarantee that the farmer will have the land from one year to the next,” Mr O’Dowd said.
One approach Macra have proposed is where Agricultural Relief is applied to land transfers, the land should not be rented, it must be farmed, leased or used in a collaborative arrangement.
On stock relief, Macra have proposed and increase in the duration to five years for 100% stock relief for young farmers in line with State Aid rules, and greater flexibility on the activation timeframe for the relief to suit longer business plans.
The current 50% tax relief for partnerships is limited to a maximum of €7,500 and needs to be significantly revised upwards.
Macra also outlined proposals on income volatility, capital allowances and capital taxes for young farmers.
Meanwhile, ICSA president Patrick Kent told the Oireachtas committee that there is an urgent need to make farm partnerships as tax efficient as long term leases for farmers over 40 years old.
“Farmers in the drystock sector are looking at all options as they grow tired of making no money from cattle and sheep. Many have huge potential for partnering with a young farmer but the current tax exemption for long-term leasing is not available where an older farmer proposes to lease to a company or to a partner,” said Mr Kent.
“This needs to be re-examined because a partnership structure will only work if it provides a worthwhile after-tax income for both parties.”
ICSA also outlined how high income taxes and capital taxes are a disincentive to hard work and enterprise. Moreover, the risk of high capital taxes has increased as a result of decisions taken in recent budgets and is potentially undermining the next generation of young farmers who might be considering taking over the family farm.
