OSULLIVAN MALONE & CO.

Farm Succession
Presentation by:
Martin OSullivan B.Agr.Sc QFA MACA

O'SULLIVAN MALONE & CO.

Taxation - Income Tax, CAT, CGT & Stamp Duty

Two totally separate legal
financial entities
Legaland
Fees
Bank debts
Provisions
O'SULLIVAN MALONE & CO.

INCOME TAX

Income Tax consequences of parent ceasing

Income averaging clawback
No Stock Relief in last year
May loose tax bands

O'SULLIVAN MALONE & CO.

INCOME TAX

Income Tax opportunities at commencement

Maximising family tax bands
100% Stock relief (for 4 years)
The creation of two farming entities where appropriate

O'SULLIVAN MALONE & CO.

INCOME TAX

Trading structure for successor

Sole Trader
Partnership
Limited Company

O'SULLIVAN MALONE & CO.

CAPITAL GAINS TAX

Retirement Relief
Aged over 55 years
Land owned & farmed for 10 years
or
Leased to family member for less than 15 years and
owned or farmed for 10 years prior to leasing

O'SULLIVAN MALONE & CO.

CAPITAL GAINS TAX

or
Leased to a non relative since 1/1/14
and owned and farmed the land for 10
years prior to lease
or
Leased land under ERS and owned and
farmed the land for 10 years prior to
lease.
O'SULLIVAN MALONE & CO.

CAPITAL GAINS TAX

Upper exemption limit for retirement relief

3m where the transferor is over 66 years on 1 January
2014 . Above that value the transferor will pay 33%
Capital Gains Tax
Note: Where CGT applies to the transferor and CAT
applies to the transferee in respect of the same
transaction, a tax credit on the CGT paid will be available
against the CAT liability. (Same Event Relief)
O'SULLIVAN MALONE & CO.

CAPITAL ACQUISITION TAX

Current Exemption limits

Son, Daughter, Favourite Nephew - 225,000
Brother, Sister, Niece, Nephew, Grandchild - 30,150
Non relative - 15,075
Rate of Tax
33%

O'SULLIVAN MALONE & CO.

CAPITAL ACQUISITION
TAX

Agricultural Relief
Reduces value of agricultural assets by 90%
Requirement to satisfy the farmer test 80% of total
gross asset value (less mortgage on PPR) must comprise
agricultural assets.
Transferee must retain the assets for 6 years
Recipient must remain Irish resident for 3 years
Shares in farming company not eligible
O'SULLIVAN MALONE & CO.

CAPITAL ACQUISITION
TAX

Business Property Relief

Where a transferee is not eligible for Agricultural Relief
(AR) they may qualify for Business Property Relief (BR)
where they are taking over a farm as a going concern. This
is similar to AR without the farmer test. However, the
farm dwelling does not qualify as an asset qualifying for
the 90% reduction.

O'SULLIVAN MALONE & CO.

CAPITAL ACQUISITIONS
TAX

Favourite Nephew/Niece
Must be a child of a brother or sister
Must have worked substantially on a full time basis
meaning more than 15 hours per week if farming carried
on by the disponer (or his spouse) and the successor.
Otherwise 24 hours per week.
An active farming operation must exist
O'SULLIVAN MALONE & CO.

CAPITAL ACQUISITIONS
TAX

Inheritance Tax Insurance

Tax will arise where farm assets being transferred exceed
2.25m
Insurance on joint lives of parents longest survivor
Proceeds not taxable insofar as they go to meet CAT
Essential in many cases
Needs to be monitored at regular intervals
O'SULLIVAN MALONE & CO.

BANK DEBT

Handing over farm bank loans

Beware the re-pricing trap !
Debt may have to remain in parents name

O'SULLIVAN MALONE & CO.

STAMP DUTY

Stamp Duty
Rate is 1% for family transfers up until 31 Dec. 2014
Rate is 2% from 1 January 2015
Exemption scheme runs until 31 December 2015
After availing, the successor must spend not less than
50% of his/her time farming the lands for at least 5 years
subsequent to transfer.
No Stamp Duty on inheritances
O'SULLIVAN MALONE & CO.

PROVISIONS

Provision for family members

Need to be realistic and manageable
Ideally should not create a lien on the title deeds
May be more beneficial for the parent to deal with prior
to transfer
Can such provisions be dealt with in a tax efficient
manner
O'SULLIVAN MALONE & CO.

FARM SUCCESSION
Presented by:
Martin OSullivan B.Agr. Sc., QFA, MACA
OSullivan Malone & Co
Accountants, Registered Auditors & Agricultural Consultants
Bank House
Main Street
Carrick on Suir
Co. Tipperary
TEL 051 640397 www.som.ie

O'SULLIVAN MALONE & CO.