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Section 664 Relief for certain income from leasing of farm land

(1) (a) In this section―

[“EU Single Payment Scheme” means the scheme administered by the Minister for Agriculture, Food and the Marine under Regulation (EU) No. 1307/2013 of the European Parliament and of the Council of 17 December 2013, amended by Commission Delegated Regulation (EU) No. 639/2014 of 11 March 2014, Commission Delegated Regulation (EU) 994/2014 of 13 May 2014, Commission Delegated Regulation (EU) 1001/2014 of 18 July 2014, Commission Delegated Regulation (EU) 1378/2014 of 17 October 2014 and Commission Delegated Regulation (EU) 2015/851 of 27 March 2015;]1

“farm land” means land in the State wholly or mainly occupied for the purposes of husbandry and includes a building (other than a building or part of a building used as a dwelling) situated on the land and used for the purposes of farming that land;

“lease”, “lessee”, “lessor” and “rent” have the same meanings respectively as in Chapter 8 of Part 4;

“qualifying lease” means a lease of farm land which is―

(i) in writing or evidenced in writing,

(ii) for a definite term of 5 years or more, and

(iii) made on an arm’s length basis between a qualifying lessor or qualifying lessors and a lessee or lessees who is, or each of whom is, a qualifying lessee in relation to the qualifying lessor or the qualifying lessors;

[“qualifying lessee”, in relation to a qualifying lessor or qualifying lessors, means, as the case may be—

(i) an individual who—

(I) is not connected with the qualifying lessor or with any of the qualifying lessors, and

(II) uses any farm land leased from the qualifying lessor or the qualifying lessors for the purpose of a trade of farming carried on solely or in partnership,

or

(ii) a company which—

(I) is not connected with the qualifying lessor or with any of the qualifying lessors,

(II) is not controlled either directly or indirectly by any person who is connected with the qualifying lessor or with any of the qualifying lessors, and

(III) uses any farm land leased from the qualifying lessor or the qualifying lessors for the purpose of a trade of farming carried on solely or in partnership;]2

“qualifying lessor” means an individual who―

[…]3

(ii) has not after the 30th day of January, 1985, leased the farm land which is the subject of the qualifying lease from a person or persons, who is or are, or one of whom is, connected with him or her, on terms which are not such as might have been expected to be included in a lease if the negotiations for the lease had been at arm’s length;

“the specified amount”, in relation to any surplus or surpluses (within the meaning of section 97(1)) arising in respect of the rent or the rents from any farm land let under a qualifying lease or qualifying leases, means, subject to paragraph (b), the lesser of―

(i) the amount of that surplus or the aggregate amount of those surpluses,

(ii) as respects a qualifying lease or qualifying leases made―

(I) in the period beginning on the 6th day of April, 1985, and ending on the 19th day of January, 1987, [€2,539.48]4,

(II) in the period beginning on the 20th day of January, 1987, and ending on the 31st day of December, 1987, [€3,555.27]4,

(III) in the period beginning on the 1st day of January, 1988, and ending on the 29th day of January, 1991, [€2,539.48]4,

(IV) in the period beginning on the 30th day of January, 1991, and ending on the 22nd day of January, 1996―

(A) [€5,078.95]4, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(B) [€3,809.21]4, [in any other case,]5

[(V) in the period beginning on 23 January 1996, and ending on 31 December 2003―

(A) €7,618.43, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(B) €5,078.95, in any other case, …6]7

[(VI) in the period beginning on 1 January 2004 and ending on 31 December 2005―

(A) €10,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(B) €7,500, in any other case, […]8

[(VII) in the period beginning on 1 January 2006 and ending on 31 December 2006―

(A) €15,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(B) €12,000, in any other case, […]9

(VIII) [in the period beginning on 1 January 2007 and ending on 31 December 2014]10

(A) €20,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 10 years or more,

(B) €15,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, other than a case to which clause (A) applies, and

(C) €12,000, in any other [case, or]11]12]13

[(IX) on or after 1 January 2015—

(A) €40,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 15 years or more,

(B) €30,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 10 years or more, other than a case to which clause (A) applies,

(C) €22,500, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, other than a case to which either clause (A) or clause (B) applies, and

(D) €18,000, in any other case,]14

and

(iii) where the rent or rents was or were not receivable in respect of a full year’s letting or lettings, such amount as bears to the amount determined in accordance with [subparagraph (I), (II), (III), (IV), (V), (VI), (VII)[, (VIII) or (IX),]15 as may be appropriate, of paragraph (ii) of this definition]16 the same proportion as the amount of the rent or the aggregate amount of the rents bears to the amount of the rent or the aggregate amount of the rents which would be receivable for a full year’s letting or lettings.

(b) Where the income of a qualifying lessor consists of or includes rent or rents―

(i) from a qualifying lease or qualifying leases made in the period beginning on the 20th day of January, 1987, and ending on the 31st day of December, 1987, and from a qualifying lease made―

(I) in the period beginning on the 6th day of April, 1985, and ending on the 19th day of January, 1987, or

(II) in the period beginning on the 1st day of January, 1988, and ending on the 29th day of January, 1991,

the specified amount shall not exceed [€3,555.27]4;

(ii) from a qualifying lease or qualifying leases made in the period beginning on the 30th day of January, 1991, and ending on the 22nd day of January, 1996, and from a qualifying lease made before the 30th day of January, 1991, the specified amount shall not exceed―

(I) [€5,078.95]4, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(II) [€3,809.21]4, in any other case;

[(iii) from a qualifying lease or qualifying leases made in the period beginning on 23 January 1996, and ending on 31 December 2003, and from a qualifying lease made before 23 January 1996, the specified amount shall not exceed―

(I) €7,618.43, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(II) €5,078.95, in any other case;]17

[(iv) from a qualifying lease or qualifying leases made in the period beginning on 1 January 2004, and ending on 31 December 2005, and from a qualifying lease made before 1 January 2004, the specified amount shall not exceed―

(I) €10,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(II) €7,500, in any other case;

[(v) from a qualifying lease or qualifying leases made in the period beginning on 1 January 2006 and ending on 31 December 2006, and from a qualifying lease made before 1 January 2006, the specified amount shall not exceed―

(I) €15,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(II) €12,000, in any other case;

[(vi) from a qualifying lease or qualifying leases made in the period beginning on 1 January 2007 and ending on 31 December 2014, and from a qualifying lease made before 1 January 2007, the specified amount shall not exceed—

(I) €20,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 10 years or more,

(II) €15,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, other than a case to which clause (I) applies, and

(III) €12,000, in any other case;

(vii) from a qualifying lease or qualifying leases made on or after 1 January 2015, and from a qualifying lease made at any other time, the specified amount shall not exceed—

(I) €40,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 15 years or more,

(II) €30,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 10 years or more, other than a case to which clause (I) applies,

(III) €22,500, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, other than a case to which either clause (I) or clause (II) applies, and

(IV) €18,000, in any other case.]18]19]20

Amendments

1 Definition of “EU Single Payment Scheme” inserted by Finance Act 2015 section 19(2)(b)(i)(I), with effect from 21 December 2015.

2 Definition of “qualifying lessee” substituted by Finance Act 2014 section 20(b)(i).

3 Subpara. (i) deleted by Finance Act 2014 section 20(b)(ii).

4 Substituted by Finance Act 2001 section 240(2) and Schedule 5 as respects 2002 and later tax years.

5 Substituted by Finance Act 2004 section 14(1)(a)(ii)(I) from 1 January 2004.

6 Deleted by Finance Act 2006 section 12(1)(a)(i) from 1 January 2006.

7 Para (ii)(V) of definition of “the specified amount” substituted by Finance Act 2004 section 14(1)(a)(ii)(II) from 1 January 2004.

8 Deleted by Finance Act 2007 section 16(1)(a)(i) from 1 January 2007.

9 Deleted by Finance Act 2015 section 19(2)(b)(i)(II)(A), with effect from 21 December 2015.

10 Substituted by Finance Act 2014 section 20(b)(iii).

11 Substituted by by Finance Act 2015 section 19(2)(b)(i)(II)(B), with effect from 21 December 2015.

12 Para (ii)(VII)-(VIII) of definition of “the specified amount” substituted (for para (ii)(VII)) by Finance Act 2007 section 16(1)(a)(ii).

13 Para (ii)(VI)-(VII) of definition of “the specified amount” substituted (for para (ii)(VI)) by Finance Act 2006 section 12(1)(a)(ii).

14 Subpara. (IX) inserted by Finance Act 2014 section 20(b)(iv).

15 Substituted by Finance Act 2014 section 20(b)(v).

16 Substituted by Finance Act 2007 section 16(1)(a)(iii) from 1 February 2007.

17 Subpara (b)(iii) substituted by Finance Act 2004 section 14(1)(b) from 1 January 2004.

18 Subpara. (vi) substituted (and subpara. (vii) inserted) by Finance Act 2014 section 20(c).

19 Subparas (b)(v)-(vi) substituted (for subpara (b)(v)) by Finance Act 2007 section 16(1)(b) from 1 January 2007.

20 Subparas (b)(vi)-(vii) substituted (for subpara (b)(vi)) by Finance Act 2006 section 12(1)(b) from 1 January 2006.

(2) Where for any year of assessment―

(a) the total income of a qualifying lessor consists of or includes any profits or gains chargeable to tax under Case V of Schedule D, and

(b) any surplus or surpluses (within the meaning of section 97(1)) arising in respect of the rent or rents from any farm land let under a qualifying lease or qualifying leases has been or have been taken into account in computing the amount of those profits or gains,

the qualifying lessor shall in determining that total income be entitled to a deduction of the lesser of―

(i) the specified amount in relation to the surplus or surpluses, and

(ii) the amount of the profits or gains.

(3) The amount of any deduction due under subsection (2) shall—

(a) where by virtue of section 1017 a woman’s income is deemed to be her husband’s income, be determined separately as regards the part of his income which is his by virtue of that section and the part which is his apart from that section,

(b) where by virtue of section 1017 a man’s income is deemed to be his wife’s income, be determined separately as regards the part of her income which is hers by virtue of that section and the part which is hers apart from that section, or

(c) where by virtue of section 1031C an individual’s income is deemed to be his or her civil partner’s income, be determined separately as regards the part of his or her income which is his or hers by virtue of that section and the part which is his or hers apart from that section,

and where section 1023 or 1031H, as the case may be, applies, any deduction allowed by virtue of subsection (2) shall be allocated to the person and to his or her spouse or civil partner as if they were not married or civil partners.

Amendments

Subs (3) substituted by Finance (No. 3) Act 2011 section 1(2) and Schedule 1 Item 175 for 2011 and later tax years.

(4) (a) For the purposes of subsection (2), where a single qualifying lease relates to both farm land and other property, goods or services, only such amount, if any, of the surplus arising in respect of the rent payable under the lease [as is properly attributable to the lease of the farm land, and after such apportionments of rent, expenses and other deductions as are necessary,]1 shall be treated as a surplus arising in respect of a rent from farm land let under a qualifying lease.

[…]2

Amendments

1 Substituted by Finance (Tax Appeals) Act 2015 section 37(8)(d)(i) with effect from 21 March 2016.

2 Para (b) deleted by Finance (Tax Appeals) Act 2015 section 37(8)(d)(ii) with effect from 21 March 2016.

(5) For the purposes of determining the amount of any relief to be granted under this section, the inspector may by notice in writing require the lessor to furnish such information as the inspector considers necessary.

(6) (a) Subsections (1) and (2) of section 459 and section 460 shall apply to a deduction under this section as they apply to any allowance, deduction, relief or reduction under the provisions specified in the Table to section 458.

(b) Subsections (3) and (4) of section 459 and paragraph 8 of Schedule 28 shall, with any necessary modifications, apply in relation to a deduction under this section.

(7) Notwithstanding any other provisions of the Tax Acts, for the purposes of determining the amount of any relief to be granted under this section, any payment received by the lessor, relating to the leasing of farm land under a qualifying lease, which is in consequence of the receipt or the expected receipt by the lessee of a payment relating to that farm land under the EU Single Payment Scheme […]1, will be treated as rent from farm land.

Amendments

Subs (7) inserted by Finance Act 2006 section 12(1)(c) from 1 January 2005.

1 Deleted by Finance Act 2015 section 19(2)(b)(ii), with effect from 21 December 2015.

(8) A lease which would otherwise be a qualifying lease shall not be a qualifying lease if—

(a) a qualifying lessee of the lease (the ‘first mentioned lease’), or a person connected with that qualifying lessee of the first mentioned lease, is a qualifying lessor of another qualifying lease (the ‘second mentioned lease’) where the qualifying lessee of the first mentioned lease is a qualifying lessor of the second mentioned lease,

(b) a qualifying lessee of the lease (the ‘first mentioned lease’) is a qualifying lessor of another qualifying lease (the ‘second mentioned lease’) where that qualifying lessee of the first mentioned lease, or a person connected with that qualifying lessee, is a qualifying lessor of the second mentioned lease, or

(c) the farm land which is the subject of the lease is farmed, in whole or in part, by the qualifying lessor.

Amendments

Subs (8) inserted by Finance Act 2015 section 19(2)(b)(iii), with effect from 21 December 2015.