Agricultural Relief

Can Agricultural Relief be withdrawn or clawed back?

Agricultural Relief can be withdrawn or clawed back in the following circumstances:

• If any part of the property (other than crops, trees and underwood) is disposed of or compulsorily acquired:
  • within six years of receiving a gift or inheritance
  • and
  • is not replaced with other agricultural property.

The time limit for reinvesting in replacement agricultural property is within one year of the sale, or six years of the compulsory acquisition.

The extent of the clawback depends on the amount of the proceeds that are not reinvested in agricultural property. If the full proceeds are reinvested, there is no clawback of relief. If only part of the proceeds are reinvested, there is partial clawback of relief. If CGT is paid on a disposal, only the net proceeds available after payment of the CGT need be reinvested.

It is not necessary that reinvestment is made in the same type of agricultural property. For example, the proceeds from the sale of livestock could be reinvested in land or machinery without losing the relief.

• Where the date of the gift or inheritance and the valuation date are on or after 1 January 2015 relief may be withdrawn if you:
  • no longer farm the property for at least 50% of your working hours
  • or
  • do not farm the property on a commercial basis for at least six years from that date.
• Before 7 February 2012 you were required to reside in the state for three years after the date of the gift or inheritance. No residency requirements apply on or after 8 February 2012.

Next: How do you claim Agricultural Relief?