Farmers welcome budget incentives

FARMERS have reacted positively to Finance Minister Michael Noonan’s unveiling of a series of measures aimed at encouraging the transfer of the family farm to the next generation.

Young farmers were delighted to see Mr Noonan introduce a 50% stock relief provision for all farm partnerships and a 100% stock relief for certain young, trained farmers entering farm partnerships.

Macra na Feirme president Alan Jagoe said: “The family farm model is highly efficient and farm partnerships play an important role in the support of this arrangement.”

Mr Noonan also said the reduced rate of stamp duty on the transfer of commercial property — cut from 6% to 2% — will apply to farmland.

The retention of 90% agricultural relief under the capital acquisitions tax (CAT) will also ease the transfer of family farms to younger farmers. So too should the modification of the retirement relief from capital gains tax (CGT).

Properties bought from now until the end of 2013, and held for seven years, will be transferred free of CGT. This will boost the transfers of farms and businesses before the current owners reach the age of 66, Mr Noonan said.

This tax break window should encourage family farms to be transferred to the next generation. At present, only 7% of Irish farmers are under 35 years of age. With 25% of farmers in the country already over the age of 65, the sector has been facing an uphill battle to reach its Food Harvest 2020 report targets of growing annual agri-food exports from €8 billion to €13bn by 2020.

Given agri-food’s exports focus, the sector will also welcome the foreign earnings deduction to aid companies seeking to expand into emerging markets such as Brazil, Russia, India, China and South Africa, all of which have been identified as target markets by Bord Bia and the Irish Dairy Board.

IFA president John Bryan welcomed the abolition of the universal social charge for incomes under €10,000 along with the taxation measures for farm transfer, investment and land mobility.

However, he said the reduction in the CAT/transfer tax threshold to €250,000 is an excessive drop, and the increase to 30% in the tax rate on the balance, will impact negatively on the transfer of commercial farms.

Mr Bryan said: “It is crucial to have incentives to transfer land use and to promote on-farm investment.”