Finance Act, 1985

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Exemption of certain income from leasing of farm land.

10.—(1) (a) In this section—

“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 meanings respectively assigned to them by Chapter VI of Part IV of the Income Tax Act, 1967 ;

“qualifying lease” means a lease of farm land which—

(i) is in writing or is evidenced in writing, and

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

(iii) is 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 to qualifying lessors, means an individual—

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

(ii) who uses any farm land leased by him from the qualifying lessor or the qualifying lessors for the purposes of a trade of farming carried on by him solely or in partnership;

“qualifying lessor” means an individual who—

(i) is of the age of 55 years or upwards or who is permanently incapacitated by reason of mental or physical infirmity from carrying on a trade of farming, and

(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 one of whom is, connected with him, 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 81 (4) of the Income Tax Act, 1967 ) arising in respect of the rent or the rents from any farm land let under a qualifying lease or qualifying leases, means—

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

(ii) £2,000, or

(iii) where the rent or rents were not receivable in respect of a full year's letting or lettings, such amount as bears to £2,000 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,

whichever is the least.

(b) A person shall be regarded for the purposes of this section as connected with another person if he would be so regarded in accordance with the provisions of section 16 of the Finance (Miscellaneous Provisions) Act, 1968 .

(2) Where for the year 1985-86 or any subsequent year of assessment 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 any surplus or surpluses (within the meaning of section 81 (4) of the Income Tax Act, 1967 ) 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 arriving at that total income, be entitled to a deduction of—

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

(b) the amount of the profits or gains,

whichever is the lesser.

(3) The amount of any deduction due under subsection (2) shall, where by virtue of section 194 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , a woman's income is deemed to be her husband's, 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, and where the provisions of section 197 of that Act apply any deduction allowed by virtue of the said subsection (2) shall be allocated to the husband and to the wife as if they were not married.

(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 determined by the inspector and after such apportionments of rent, expenses and other deductions as are necessary, according to the best of his knowledge and judgment, to be properly attributable to the lease of the farm land shall be treated as a surplus arising in respect of a rent from farm land let under a qualifying lease.

(b) Any amount which, by virtue of paragraph (a), is determined by the inspector may be amended by the Appeal Commissioners or by the Circuit Court on the hearing, or the rehearing, of an appeal against that determination.

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

(6) All such provisions of the Income Tax Acts as apply in relation to the deductions specified in sections 138 to 143 of the Income Tax Act, 1967 , shall, with any necessary modifications, apply in relation to a deduction under this section.